Shaun has a cousin named Lilly, who owns a successful cosmetics business and pays income tax at the higher rate. In 2021/22 Lilly made the following disposals of assets:

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
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Chapter12: Nonrecognition Transactions
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Shaun has a cousin named Lilly, who owns a successful cosmetics business and pays income tax at the higher rate. In 2021/22 Lilly made the following disposals of assets:

  • May 2021: Sold a painting at auction for £8,400. The painting had been a gift from her grandmother. Lilly paid auction fees of £320.
  • May 2021: Sold a second painting to Shaun. This painting had cost Lilly £7,200 in 2014 but she sells it to Shaun for £5,000, which is the estimated market value.
  • July 2021: Lilly gifted the goodwill in her cosmetics business to her twenty year old daughter who works in the business. The goodwill was acquired for £12,000 when Lilly purchased the business in 2010 and its market value in July 2021 is £65,000.  
  • December 2021: Sold 2,000 shares in Jabo plc. for £28,000. Lilly had purchased 1500 shares in 2008 for £2,000 and another 1,800 shares in 2012 for £5,400.   

 

 

 

 

Required:

  1. Calculate Lilly’s capital gains tax liability for 2021/22 and explain how holdover relief might be claimed on any of the above transactions.
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