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ACCA Strategic Professional · Advanced Taxation (UK) · Alternative ways of achieving personal or business outcomes and their tax consequences

Mira holds shares in an unquoted trading company and is considering selling at a gain of £50,000 as a non-employee investor who subscribed for new shares four years ago and has never been an officer. She has not used investors' relief. Which statement is correct under the ATX-UK tax tables?

Investors' relief has a lifetime limit of £1,000,000 and taxes qualifying gains at 14%, as shown in the ATX-UK tax tables. Options quoting a higher limit, a 10% rate or no limit are wrong.

  1. AInvestors' relief has a £1,000,000 lifetime limit and taxes qualifying gains at 14%Correct
  2. BInvestors' relief has a £10,000,000 lifetime limit and taxes gains at 10%
  3. CInvestors' relief is limited to £1,000,000 but taxes gains at 18%
  4. DInvestors' relief has no lifetime limit and taxes gains at 14%

Explanation

The tax tables give a £1,000,000 lifetime limit for investors' relief and a 14% rate. The other options use wrong limits or rates. The conditions, such as new shares subscribed for and a minimum holding period, are separate from the figures asked.

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