Reliefs
BUSINESS ASSETS




ROR
HOR
GR
BAR +IR
defer
taxed @ 10%
NON BUSINESS ASSET

PPR
exempt
Gift relief
Donor
Proceeds/MV
x
Cost
(x)
Gain
x
GR
(x)
Chargeable gain
x
Donee
Acq cost = MV =
x
GR
(x)
Base cost
x
Ex. 5
Outright gift
Donor
Proceeds/MV
200000
Cost
(110000)
Gain
90000
GR
(90000)
Chargeable gain
0
Donee
Acq cost = MV =
200000
GR
(90000)
Base cost
110000
Sale at under value
Ex.6 If --- son paid--- 120,000—father
Donor
Proceeds/MV
200000
Cost
(110000)
Gain
90000
GR
(80000)
Chargeable gain
10000
Donee
Acq cost = MV =
200000
GR
(80000)
Base cost
120000
If --- son paid--- 70,000—father
Donor
Proceeds/MV
200000
Cost
(110000)
Gain
90000
GR
(90000)
Chargeable gain
0
Donee
Acq cost = MV =
200000
GR
(90000)
Base cost
110000
If the sale proceeds charged by the donor are less than the original cost of the asset then the transaction
is treated as outright gifts.
Share and securities = value = assets
Non-current assets
Business assets (1)
+
PPE
current assets (3)
+
non business assets (2)
inventory
investments
receivables
L&B
cash
P &M
1
YES
YES
CA
CBA
2
YES
NO
Gift relief = gain * CBA/CA
EX 7 (Assume Ahmed owned more than 5% of A plc.)
Donor
Proceeds/MV
200000
Cost
(120000)
Gain
80000
GR
W1
Chargeable gain
(64000)
16000
Donee
Acq cost = MV =
200000
GR
(64000)
Base cost
136000
W1
GR = 80000*400000/500000 = 64000
1st
2nd
3rd
Qualifying assets--------- Qualifying conditions------------ Working………….
3
NO
NO
Ex 9
Other gains
BADR gains
G/W
260000
FOB
370000
W/H
170000
Total gains
170000
b/f losses
(28000)
net gains
142000
AE
(12300)
Taxable gains
129700
CGT
630000 @ 10%
63000
129700 @ 20%
Due date
31 jan22
BB
37500
Used
4000
Unused
33500
Investor relief
Unquoted co shares = subscription
3 years owned
630000
630000
630000
PPR (Main residence)
Proceeds
100000
Cost
(60,000)
Gain
40,000
PPR
w1
Chargeable
(40000)
0
W1 PPR
Gain * Period of occupation
Period of ownership
40000*300/300 = 40000
Period of ownership = date of acquisition to date of disposal
Occupation
1.
2.
3.



Actual occupation
Last 09 months of ownership
Deemed occupation (period of absence)
Up to 3 years for any reason
Condition =
4 years while working in UK
preceded and followed by actual occupation
Any period while working abroad
Ex 10
Proceeds
150000
Cost
(88200)
Gain
61800
PPR w1
(36009)
25791
Letting relief w2
()
Chargeable gain
W1 PPR
61800 * 222/381 =
36009
PERIOD
TOTAL
ACTUAL
Actual
1apr89—30june89
3
3
Work abroad
1july89—1july91
24
24
Actual
1july91—31dec06
186
186
Spain friend
1jan07—31dec20
168
Last 9 months
1 room as office used out of 8 rooms
61800 *1/8 = chargeable
61800*7/8 = gain available for PPR
Letting relief
Lower of



40000
Gain exempted under PPR rules
Gain allocated to letting part.
Ex 1
8 rooms = total
3 rooms = let out
5 rooms = residence
Letting relief
Lower of



40000
36009
61800/8*3=23175
61800*5/8= ppr relief
61800*3/8= letting relief
159
9
381
Business use
CHARGEABLE
222
159
Step 1
Relief Qualifying assets
ROR
HOR
GR
IR
ER
IR
PPR
Step 2
Qualifying conditions
Step 3
Working/formula