Practice Assessment 2 task 11C FA2021 Business Tax

ukalia

Is anyone able to explain the answers to the below questions.

Wilf is selling shares in his company. He is the sole shareholder & director and has been for 15 years. He subscribed for the 1,000 shares at £1 each & a third-part purchaser has offered to buy then for £1.4m on 30/06/21. Wilf has had no other disposal.

(i) Calculate the taxable gain for Wilf on the sale of the shares.
Answer £1,386,700

(ii) Calculate the tax that will be charged on the gain assuming that Wilf claims all beneficial reliefs.
Answer £177,340

(iii) Calculate the after-tax proceeds that Wilf will have from the sale.
Answer £1,222,660

crispy

Hi,

(i) Proceeds 1,400,000
Less: Cost (1,000)
Gain 1,399,000
Less: Allowance (12,300)
Taxable Gain 1,386,700


(ii) 1,000,000 @ 10 % = 100,000
386,700 @ 20 % = 77,340
Tax Payable 177,340


(iii) 1,400,000 - 177,340 = 1,222,660

ukalia

Thank you!