Test your understanding

(1). For the tax year 2016–17, Som has chargeable gains of £22,700. She has unused capital losses of £26,100 brought forward from the tax year 2015–16.

What amount of unused capital losses will Som carry forward to the tax year 2017–18?

A £26,100
B Nil
C £14,500
D £3,400

(2). For the tax year 2016–17, Alistair’s taxable income is £28,340. During the year he sold an antique vase and this resulted in a chargeable gain of £32,700.

What is Alistair’s CGT liability for the tax year 2016–17?

A £3,954
B £6,174
C £4,320
D £2,160

(3). Dash Ltd sold a factory on 7 February 2017 for £260,000. The factory was purchased on 4 July 1997 for £114,000. Retail price indices (RPIs) are 157.5 for July 1997 and 268.4 for February 2017.

What is Dash Ltd’s chargeable gain in respect of the disposal of the factory?

A £146,000
B £43,216
C £65,730
D £65,744

(4). Jade sold 25,000 £1 ordinary shares in Silver plc on 13 March 2017. Jade had purchased 60,000 shares in Silver plc on 18 February 2007 for £72,000. On 24 May 2011, Silver plc made a 1 for 4 bonus issue.

What cost figure will be used in calculating the chargeable gain on the disposal of Jade’s 25,000 ordinary shares in Silver plc?

A £6,000
B £24,000
C £25,000
D £30,000

The following scenario relates to questions 5–9.

Jay disposed of various assets during the tax year 2016–17, and these disposals resulted in chargeable gains of £45,400 qualifying for entrepreneurs’ relief and another £122,400 of chargeable gains not qualifying for entrepreneurs’ relief. None of the gains are residential property gains. Jay’s disposals included the following:

1. On 19 April 2016, Jay sold five acres of land for £72,000. He had originally purchased eight acres of land on 7 June 2007 for £68,000. The market value of the unsold three acres of land as at 19 April 2016 is £40,500.
2. On 8 June 2016, Jay sold an antique table for £12,800. The table had been purchased on 2 May 2005 for £1,300.
3. On 19 October 2016, Jay made a gift of his entire shareholding of £1 ordinary shares in AMZ plc to his son. On the date of the gift, the shares were quoted at £10.20 – £10.64.
4. On 10 March 2017, Jay sold a factory and this disposal resulted in a chargeable gain.

Jay does not have any taxable income for the tax year 2016–17.

Required:

(5). What cost figure will have been used in calculating the chargeable gain on the disposal of Jay’s five acres of land?

A £42,500
B £68,000
C £46,080
D £43,520


(6). What is Jay’s chargeable gain in respect of the disposal of the antique table?

A £11,333
B £4,080
C £11,500
D £6,800

(7). What market value figure will have been used in calculating the chargeable gain on Jay’s gift of AMZ plc shares?

A £10.20 per share
B £10.31 per share
C £10.42 per share
D £10.64 per share

(8). During what period must reinvestment take place if Jay wishes to claim rollover relief in respect of the chargeable gain arising on the disposal of the factory?

A 10 March 2016 to 10 March 2018
B 10 March 2017 to 10 March 2020
C 10 March 2016 to 10 March 2020
D 10 March 2017 to 10 March 2018

(9). What is Jay’s CGT liability for the tax year 2016–17?

A £23,600
B £26,800
C £25,820
D £29,020

Answers