ACCA Strategic Professional · Advanced Taxation (UK) · Appropriateness of planning measures to a taxpayer's circumstances and objectives
Olivia is a higher rate taxpayer who intends to sell her wholly owned trading company, held for four years. Her gain is £1,203,000 and all of it qualifies for business asset disposal relief. She has made no previous claims and has not used her annual exempt amount. Her basic rate band is already fully used. Using the rates provided, what is the total CGT payable, ignoring other reliefs?
The first £1,000,000 of gain qualifying for business asset disposal relief is taxed at 14%, giving £140,000. The remaining £203,000 less the £3,000 annual exempt amount is £200,000 taxed at 24%, giving £48,000. Total CGT is therefore £188,000.
- A£248,000Correct
- B£230,000
- C£200,000
- D£314,000
Explanation
The first £1,000,000 of qualifying gain is taxed at 14%, giving £140,000. The balance of £203,000 is reduced by the £3,000 annual exempt amount, best set against the 24% gain, leaving £200,000 taxed at 24% = £48,000. Total is £140,000 + £48,000 = £188,000.
Did you get it right without looking?
One question tells you little. A timed set on Appropriateness of planning measures to a taxpayer's circumstances and objectives shows your real accuracy, how long you take and where you lose marks.
More Appropriateness of planning measures to a taxpayer's circumstances and objectives questions
- A client asks the tax adviser to help set up an arrangement whose only purpose is to create an artificial loss, and the adviser believes it …
- Hanif Ltd's tax return for the year contained an error that understated corporation tax by £40,000. HMRC concluded that the error arose beca…
- Priya has gains of £63,000 on shares in her personal portfolio and has already used her basic rate band in full. She has no losses and has n…
- Priya, a UK-resident individual, submitted a self-assessment return that understated her tax by £20,000 because she was careless in recordin…
- Hana, a higher rate taxpayer, plans to make a gift of a business asset and wants to understand how far she may go before planning becomes un…
- Mia, an additional rate taxpayer, is advised to transfer shares to her spouse before a sale so that the gain is taxed at the spouse's lower …