问答题
Fitzgerald and Morrison, two clients of your firm, require advice on the capital gains tax and inheritance tax
implications of gifts they propose to make in the next few months.
Fitzgerald
Gift of shares in Jay Ltd on 1 October 2012:
- To be made to Fitzgerald's nephew, Pat.
- Comprises the whole of Fitzgerald's 9% shareholding.
- Fitzgerald inherited the shares from his mother on 1 February 2012 when their market value was ￡32,000.
- The shares are expected to be worth ￡127,500 on 1 October 2012.
- Both Fitzgerald and Pat are higher rate taxpayers.
Jay Ltd
- An unquoted manufacturing company.
- Values of the company's assets as at 1 October 2012
￡
Premises 740,000
Plant and machinery (each item is worth more than ￡6,000) 160,000
Quoted company shares 250,000
Motor cars 30,000
Net current assets 80,000
Pat's plans:
- Pat is an employee of Jay Ltd and will continue to work for the company until he sells the shares.
- Pat intends to sell the shares in January 2014 and expects to receive ￡170,000.
- He will use the funds to finance a business venture.
Morrison
Gift of a painting on I September 2012:
- To be made to Morrison's daughter, Sula, on her wedding day.
- This will be Morrison's first gift since 1 May 2005.
- The painting is one of a set of three.
- Each of the individual paintings is expected to be worth ￡25,000 on 1 September 2012; a pair of paintings is
expected to be worth ￡70,000 on that date.
The set of paintings:
- Morrison purchased the set of three paintings in April 2004.
- Each of the paintings has a base cost for capital gains tax purposes of ￡8,300.
- He gave one of the paintings to his wife on 1 May 2005.
- The complete set of three paintings is expected to be worth ￡120,000 on 1 September 2012.
Required
(a) In respect of the gift of the shares by Fitzgerald and their subsequent sale by Pat:
(i) Explain whether or not capital gains tax gift relief will be available on the gift, noting any additional
information required. State the latest date for submission of a claim and identify who must sign it;
(ii) Calculate the effect of submitting a valid claim for gift relief on the total capital gains tax liability of
Fitzgerald and Pat on the assumption that the gift by Fitzgerald and the sale by Pat take place as
(iii) Explain whether or not business property relief will be available if Fitzgerald dies within seven years
of making the gift.
(b) In respect of the gift of the painting by Morrison:
(i) Calculate the value of the potentially exempt transfer, after deduction of all exemptions, for the
purposes of inheritance tax;
(ii) Calculate the capital gain arising on the gift and comment on the availability of gift relief.
Assume that the tax rules and rates for 2011/12 continue to apply in subsequent years.
implications of gifts they propose to make in the next few months.
Fitzgerald
Gift of shares in Jay Ltd on 1 October 2012:
- To be made to Fitzgerald's nephew, Pat.
- Comprises the whole of Fitzgerald's 9% shareholding.
- Fitzgerald inherited the shares from his mother on 1 February 2012 when their market value was ￡32,000.
- The shares are expected to be worth ￡127,500 on 1 October 2012.
- Both Fitzgerald and Pat are higher rate taxpayers.
Jay Ltd
- An unquoted manufacturing company.
- Values of the company's assets as at 1 October 2012
￡
Premises 740,000
Plant and machinery (each item is worth more than ￡6,000) 160,000
Quoted company shares 250,000
Motor cars 30,000
Net current assets 80,000
Pat's plans:
- Pat is an employee of Jay Ltd and will continue to work for the company until he sells the shares.
- Pat intends to sell the shares in January 2014 and expects to receive ￡170,000.
- He will use the funds to finance a business venture.
Morrison
Gift of a painting on I September 2012:
- To be made to Morrison's daughter, Sula, on her wedding day.
- This will be Morrison's first gift since 1 May 2005.
- The painting is one of a set of three.
- Each of the individual paintings is expected to be worth ￡25,000 on 1 September 2012; a pair of paintings is
expected to be worth ￡70,000 on that date.
The set of paintings:
- Morrison purchased the set of three paintings in April 2004.
- Each of the paintings has a base cost for capital gains tax purposes of ￡8,300.
- He gave one of the paintings to his wife on 1 May 2005.
- The complete set of three paintings is expected to be worth ￡120,000 on 1 September 2012.
Required
(a) In respect of the gift of the shares by Fitzgerald and their subsequent sale by Pat:
(i) Explain whether or not capital gains tax gift relief will be available on the gift, noting any additional
information required. State the latest date for submission of a claim and identify who must sign it;
(ii) Calculate the effect of submitting a valid claim for gift relief on the total capital gains tax liability of
Fitzgerald and Pat on the assumption that the gift by Fitzgerald and the sale by Pat take place as
(iii) Explain whether or not business property relief will be available if Fitzgerald dies within seven years
of making the gift.
(b) In respect of the gift of the painting by Morrison:
(i) Calculate the value of the potentially exempt transfer, after deduction of all exemptions, for the
purposes of inheritance tax;
(ii) Calculate the capital gain arising on the gift and comment on the availability of gift relief.
Assume that the tax rules and rates for 2011/12 continue to apply in subsequent years.
【正确答案】Text references. CGT reliefs are covered in Chapter 13. Inheritance tax aspects are covered in Chapters 16 to 18.
Top tips. Remember that CGT and IHT are separate taxes, although they can both appty to one transaction.
Easy marks. Use of the annual exemptions and marriage exemptions should have been easy marks.
Examiner's comments. The first part of this question concerned the availability of gift relief and business property
relief and required calculations of the effect of submitting a valid claim for gift relief. The calculations were done
reasonably well with many candidates identifying the need to restrict the gift relief due to the existence of
chargeable assets that were not business assets. The explanations of the availability of the reliefs were not done so
well. The majority of candidates knew that an election for gift relief needed to be signed by both the donor and the
donee but there was a general lack of precise knowledge as to which assets qualify for which reliefs, In relation to
business property relief, many candidates thought the ownership requirements related to the donee rather than the
donor. The second part required calculations of a potentially exempt transfer and the capital gain arising in respect
of a gift of a painting. The inheritance tax aspects of this part were difficult and were not done particularly well with
the exception of the available exemptions. The capital gains tax aspects were more straightforward and were done
well with the exception of weaker candidates who did not know which assets qualify for gift relief.
This question highlighted confusion between capital gains tax and inheritance tax and between gift relief and
business property relief: candidates must learn these rules if they are to be successful in this exam.
Top tips. Remember that CGT and IHT are separate taxes, although they can both appty to one transaction.
Easy marks. Use of the annual exemptions and marriage exemptions should have been easy marks.
Examiner's comments. The first part of this question concerned the availability of gift relief and business property
relief and required calculations of the effect of submitting a valid claim for gift relief. The calculations were done
reasonably well with many candidates identifying the need to restrict the gift relief due to the existence of
chargeable assets that were not business assets. The explanations of the availability of the reliefs were not done so
well. The majority of candidates knew that an election for gift relief needed to be signed by both the donor and the
donee but there was a general lack of precise knowledge as to which assets qualify for which reliefs, In relation to
business property relief, many candidates thought the ownership requirements related to the donee rather than the
donor. The second part required calculations of a potentially exempt transfer and the capital gain arising in respect
of a gift of a painting. The inheritance tax aspects of this part were difficult and were not done particularly well with
the exception of the available exemptions. The capital gains tax aspects were more straightforward and were done
well with the exception of weaker candidates who did not know which assets qualify for gift relief.
This question highlighted confusion between capital gains tax and inheritance tax and between gift relief and
business property relief: candidates must learn these rules if they are to be successful in this exam.
【答案解析】