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ACCA Strategic Professional · Advanced Taxation (UK) · Taxes applicable to a given situation or course of action and their impact

Deepak, a higher rate taxpayer, sells 30,000 shares in an unquoted UK trading company to Asha for £6.00 per share. His gain before the annual exempt amount is £120,000, he is not eligible for any relief and has no other gains. What is Asha's stamp duty and Deepak's capital gains tax (CGT)?

Stamp duty is £900 (0.5% of £180,000) and CGT is £28,080. The gain of £120,000 less the £3,000 annual exempt amount is £117,000, taxed at the 24% higher rate. Stamp duty falls on the buyer, CGT on the seller.

  1. AStamp duty £900, CGT £28,080Correct
  2. BStamp duty £900, CGT £24,000
  3. CStamp duty £1,800, CGT £28,080
  4. DStamp duty £900, CGT £28,800

Explanation

Consideration is 30,000 × £6 = £180,000, so stamp duty is 0.5% = £900. CGT is (£120,000 − £3,000) × 24% = £28,080. £28,800 ignores the annual exempt amount; £24,000 wrongly applies the 14% rate logic or an arbitrary figure; £1,800 uses 1%.

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