Capital gains tax - please help

soniaclair

question is from the AAT practice exam 2016
1) Ramjet sold a business in July 2012 and made a gain of £7,500.000
In February 2017 she sold another business and made a gain of £4,000.000
Neither of residential properties
She used up her annual exemption on other disposals

What is the amount of capital gains tax she will have to pay on the disposal of the business in Feb 2017.

The answer is £550,000

How have they got this answer please?

Adele69

I think it's the £10 million lifetime limit on Entrepreneurs Relief for FA2016.

She uses up some of her ER in the £7,500,000 property, and has £2,500,000 remaining.

So of the £4,000,000 she can claim ER at 10% on £2,500,000 which is £250,000,
and the remainder £1,500,000 is charged at 20% which is £300,000.

The sum of these is £550,000