Documents
User Generated
Resources
Learning Center

# comparison

VIEWS: 2 PAGES: 3

• pg 1
```									Capital Gains Tax Comparison

Scenario 1:

Mr Jenkins has been a full-time director/shareholder of Swan Ltd for exactly 5 years. He acquired his 20% stake
in the company for £500,000. He receives an offer for his stake in the company for £2,000,000, which he accepts.
What would his capital gains tax position be if the sale had taken place on each of the following dates, assuming
that he is a higher rate taxpayer for all years:

i) 5 April 1997                   ii) 5 April 2008                iii) 5 April 2010                  iv) 5 April 2011

i) 1996/97       ii) 2007/08     iii) 2009/10      iv) 2010/11
Proceeds                                             2,000,000         2,000,000        2,000,000         2,000,000
Cost                                                   -500,000          -500,000         -500,000         -500,000
Indexation allowance:
i) April 1992 - April 1997                 0.137       -68,500
ii), iii) & iv) No indexation allowance                                        0               0                  0
1,431,500         1,500,000       1,500,000          1,500,000
ii) Business asset taper relief                                       -1,125,000
iii) Entrepreneurs relief - £1,000,000 x 4/9 =                                          -444,445
iv) Entrepreneurs relief - £2,000,000 x 4/9 =                                                              -888,889
1,431,500           375,000       1,055,555            611,111
Less: Annual exemption                                  -6,300            -9,200         -10,100            -10,100
1,425,200           365,800       1,045,455            601,011
Capital gains tax thereon:
i)                   1,425,200    @ 40% =             570,080
ii)                    365,800    @ 40% =                                146,320
iii)                 1,045,455    @ 18% =                                                188,182
iv)                    601,011    @ 18% =                                                                  108,182
Capital gains tax liability                          £570,080           £146,320        £188,182          £108,182

Scenario 2:

Mildred sells a buy-to-let property which she has owned for 4 years. She acquired the property for £100,000 and sells it for £300,000.
What would her capital gains tax position on the sale of the property at each of the following dates, assuming she is a higher rate
taxpayer for all years:
i) 5 April 1997
ii) 5 April 2008                iii) 5 April 2010                  iv) 5 April 2011

Proceeds                                             i) 1996/97       ii) 2007/08     iii) 2009/10      iv) 2010/11
Cost                                                    300,000           300,000          300,000          300,000
Indexation allowance:                                  -100,000          -100,000         -100,000         -100,000
i) April 1993 - April 1997
ii), iii) & iv) No indexation allowance    0.112       -11,200
0               0                  0
iii) Non-Business asset taper relief                   188,800           200,000         200,000            200,000
-20,000
Less: Annual exemption                                 188,800           180,000         200,000            200,000
-6,300            -9,200         -10,100            -10,100
Capital gains tax thereon:                             182,500           170,800         189,900            189,900
i)                     182,500    @ 40% =               73,000
ii)                    170,800    @ 40% =                                  68,320
iii)                   189,900    @ 18% =                                                 34,182
iv)                    189,900    @ 18% =                                                                    34,182
Capital Gains Tax Liability                            £73,000           £68,320         £34,182            £34,182

Scenario 3:

Mr Sousa is a UK resident who owns a property which qualifies as a furnished holiday letting in Portugal (an EEA country).
He bought the property for £150,000 exactly 8 years prior to selling it for £450,000. What would his capital gains tax position
be if the sale had taken place on each of the following dates, assuming that he is a higher rate taxpayer for all years:

i) 5 April 1997                   ii) 5 April 2008                iii) 5 April 2010                  iv) 5 April 2011

Proceeds                                             i) 1996/97       ii) 2007/08     iii) 2009/10      iv) 2010/11
Cost                                                    450,000           450,000          450,000          450,000
Indexation allowance:                                  -150,000          -150,000         -150,000         -150,000
i) April 1989 - April 1997
ii), iii) & iv) No indexation allowance    0.367       -55,050
0               0                  0
244,950           300,000         300,000            300,000
iii) Business asset taper relief                         -225,000
iii) Entrepreneurs relief - £300,000 x 4/9 =                        -133,333
iv) No entrepreneurs Relief                                                          0
Less: Annual exemption                         244,950    75,000    166,667    300,000
-6,300    -9,200    -10,100    -10,100
Capital gains tax thereon:                     238,650    65,800    156,567    289,900
i)                     238,650   @ 40% =        95,460
ii)                     65,800   @ 40% =                  26,320
iii)                   156,567   @ 18% =                             28,182
iv)                    289,900   @ 18% =                                        52,182
Capital Gains Tax Liability                    £95,460   £26,320    £28,182    £52,182

```
To top