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Example 10 John owns 100% of the shares in John Ltd of which he is the managing director. On 1 December
2022 he made a gift of the shares to his son, when the market value of the shares was £800,000. The
shares cost £200,000 in February 2002. At the time of the gift John Ltd owned the following assets.
Calculate John’s Capital Gains Tax on disposal of the shares in John Ltd and base cost of the shares for his son. 7. Private Residence Relief 7.1. The sale of an individuals only or main private residence is covered by Private Residence Relief
(PRR) The relief also covers grounds up to half a hectare.
The relief is available in full if the taxpayer occupied the property throughout the entire period
of ownership. Where occupation has been for only part of the period , a proportion of the gain
is covered by the relief
7.2. There are however, periods of absence which are
deemed to be full occupation. They include:
(a)
Last 9 months - if the property was the individuals main residence at some point in time
(b)
Any periods during which the individual was required by his employment to live abroad
(c)
Any period up to four years during which the individual is required to live elsewhere in the UK
due to employment or self employment
(d)
Up to three years for any reason.
Points (b – d) must be preceded and followed by periods of actual occupation, but for points (b – c) if
the individual could not reoccupy due to the terms of employment requiring them to work elsewhere,
by concession, the condition of actual occupation following the period of absence is not applied.
£ Freehold trading premises
500,000
Goodwill
200,000
Investments
100,000
Stock and work in progress
150,000
Debtors
80,000
Cash
170,000
1,200,000
Gain
×
Period of occupation
Period of ownership
