june 2013 GINGER AND INNOCENT

You would take account of the OMV in calculating the overall gain but the question asks: Explain how many £1 ordinary shares in Nutmeg Ltd Ginger can sell to her daughter for £4.00 per share during March 2015 without incurring any capital gains tax liability for the tax year 2014/15. It also states that gift relief is being claimed and that no other gains were made in the tax year. Gift relief would defer gains but is not available to the extent that ACTUAL sale proceeds (£4) exceeds actual cost (£2.40). Therefore each share sold will give rise to an immediate gain on the donor £1.60. The donor has AEA of 11,000 so the number of shares that may be sold before a TAXABLE gain arises will be 11,000 / 1.60 = 6,875 shares You must answer the question being asked!! Read chapter 24 section 4 on page 149 of the OT course notes and review example 5, page 150 and watch the relevant lecture if needed to deal with the VAT fuel scale charge

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