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Marlon and Alvita:
On 28 March 2017, Marlon sold a residential property for £497,000, which he had owned individually. The property had been purchased on 22 October 2001 for £152,600.
Throughout the period of ownership, the property was occupied by Marlon and his wife, Alvita, as their main residence. One-third of the property was always used exclusively for business purposes by the couple. Entrepreneurs’ relief is not available in respect of this disposal.
For the tax year 2016–17, Marlon is a higher rate taxpayer, but Alvita did not have any taxable income. This will remain the case for the tax year 2017–18. Neither of them has made any other disposals of assets during the year.
How has the examiner calculated Marlon’s chargeable gain of £114,800 for the tax year 2016–17?
Would be grateful if you could explain the rationale of only taking the business portion as chargeable gain. What will happen to the other 2/3rd portion ?
Kindly ignore this question as I now understand that 1/3rd of the overall gain is chargeable immediately and the remaining 2/3rd will qualify for PPR.
Hi ~ Tutor
Might I further ask Question19 for F6 Sept 2016 Specimen Exam – Section B
What is the amount of CGT which could have been saved if Marlon had transferred 50% ownership of the house to Alvita prior to its disposal?
The answer proceed as follow :
(11,100 at 28%) + (31,785 at 10% (28% – 18%)) = £6,286
Please explain the numbers of 11,100 and 31,785, how to make it out ??
Where does it come from ? thanksfulYou must not use the old exams on the ACCA website as they have not been updated for the changes that have taken place in the Finance Acts issued since the exam date.
You should start your studies using the OT study material – lectures and notes (the current material is for FA 2019) which is relevant for the March 2021 exam only
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