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CGT Rate

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › CGT Rate

  • This topic has 0 replies, 1 voice, and was last updated 8 months ago by kashm93.
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  • May 14, 2022 at 5:20 pm #655652
    kashm93
    Member
    • Topics: 4
    • Replies: 2
    • ☆

    Hi,

    I know I’m probably missing a simple thing here but appreciate if you can help.

    I’ve put the scenario of the question below. The questions asks us to calculate Innocents CGT if she sold her shares in Cinnamon Ltd.

    I got the following answer:

    Proceeds – 65,000
    Costs – (2,000)
    Gain – 63,000 @ 20% (Because the both have taxable income of 80,000)

    However, the answer in the BPP book suggests the rate should be at 10%. Why would this be?

    Innocent and Nigel, a married couple, both have shareholdings in Cinnamon Ltd, an unquoted
    trading company with a share capital of 100,000 £1 ordinary shares.

    Innocent has been the managing director of Cinnamon Ltd since the company’s incorporation on 1 July 2008, and she currently holds 20,000 shares (with matching voting rights) in the company. These shares were subscribed for on 1 July 2008 at their par value.

    Nigel has never been an employee or a director of Cinnamon Ltd, and he currently holds 3,000
    shares (with matching voting rights) in the company. These shares were purchased on 23 April 2012 for £46,200.

    Either Innocent or Nigel will sell 2,000 of their shares in Cinnamon Ltd during March 2021 for £65,000, but are not sure which of them should make the disposal. For the tax year 2020/21, both Innocent and Nigel have already made disposals which will fully utilise their annual exempt amounts, and they will each have taxable income of £80,000.

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