Rod has requested advice in relation to the capital gains tax implications of selling shares he obtained through his employer’s enterprise management incentive (EMI) scheme.

Rod:
– Is resident and domiciled in the UK.
– Was employed for many years by Lumba plc, before taking early retirement on 30 June 2018.
– Joined the Thora Partnership on 1 December 2018.
– Made no disposals for capital gains tax in the tax year 2018/19, other than the sale of his shares in Lumba plc (as detailed below).

Sale of Lumba plc shares:
– In May 2014, Lumba plc granted Rod options to purchase 20,000 shares under its EMI scheme.
– The market value of a share at the date of the grant was £2·60 and the option price was £2·30 per share.
– Rod exercised all of the options on 1 June 2018, when the market value was £3·90 per share.
– Rod sold all the shares on 1 December 2018, when the market value was £4·00 per share.
– The gain is eligible for entrepreneurs’ relief.

Required:
(a) Calculate Rod’s after-tax proceeds from the sale of his shares in Lumba plc and explain your calculation of the base cost for the shares. (6 marks)