问答题

问答题

问答题

问答题

问答题

问答题

问答题

问答题Boson has been living overseas and is about to return to the UK. He requires advice on his capital gains tax position and on whether to retain an overseas investment property or to sell it and invest the funds in the UK. The following information has been obtained from telephone conversations with Boson. Boson's current position: - He is UK domiciled. - He had lived in the UK all of his life until he moved to the country of Higgsia on 1 January 2008. - He sold shares in Meson plc whilst living in Higgsia. - He purchased a house in Higgsia but retained his principal private residence in the UK. Boson's future: - Boson plans to return permanently to his home in the UK on 20 January 2013. - He has signed an employment contract with Graviton Ltd, which commences on 15 April 2013. - He is considering selling the house in Higgsia and investing the after tax proceeds in a portfolio of quoted shares in UK companies or, alternatively, retaining the house and renting it out. Sales of shares in Meson plc: - Meson plc is a UK resident quoted company. - Boson inherited 19,500 shares on 1 August 2001 when they were worth ￡2 each. - Boson sold 10,000 shares on 1 May 2008 for ￡11 each. - Boson sold the remaining shares on 1 November 2012 for ￡15 each. House in the country of Higgsia: - Purchased by Boson on 1 May 2008 for ￡105,000. - Could be rented out for ￡11,000 per year after deduction of allowable expenses. - Is currently worth and could be sold for ￡200,000. The tax system in the country of Higgsia: - Non-residents of Higgsia are charged income tax at 30% on income arising in the country of Higgsia. - No capital gains tax. - No double tax treaty with the UK. Employment contract with Graviton Ltd: - Boson will be paid an annual salary of ￡35,200. Portfolio of quoted shares: - The portfolio would be expected to generate annual dividends at the rate of approximately 4.3% of the capital invested. Required (a) Advise Boson, by reference to his residence and ordinary residence position, as to whether the sales of the shares in Meson pic on 1 May 2008 and 1 November 2012 and the possible sale of the house in the country of Higgsia will be subject to capital gains tax. State what he should do in order to ensure that any gains arising are not subject to capital gains tax. Note: you are not required to prepare calculations for part (a) of this question. (b) (i) Calculate Boson's annual rental income after deduction of all taxes in respect of the house in Higgsia. (ii) On the assumption that the house in Higgsia is sold for ￡200,000, with no capital gains tax payable, calculate the annual after tax income generated if the whole amount is invested in the portfolio of quoted shares. (iii) Calculate the maximum by which the rate of return on the portfolio of quoted shares could fall before the after tax income generated would cease to exceed the return from renting out the house in Higgsia. Assume that the tax rules and rates for 2011/12 continue to apply in subsequent years.

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