Sample
302 others answered this question

Question 4a ii

Your firm has been asked to provide advice to Granada Ltd, and one of its shareholders, Maria. Maria wants advice on the tax consequences of selling some of her shares back to Granada Ltd.

Maria:
– Is resident and domiciled in the UK.
– Is a higher rate taxpayer and will remain so in the future.
– Has already realised chargeable gains of £15,000 in the tax year 2015/16.

Shares in Granada Ltd:
– Maria subscribed for 10,000 £1 ordinary shares in Granada Ltd at par in June 2006.
– Maria is one of four equal shareholders and directors of Granada Ltd.
– Maria intends to sell either 2,700 or 3,200 shares back to the company on 31 March 2016 at their current market value of £12·80 per share.
– All of the conditions for capital treatment are satisfied, except for, potentially, the condition relating to the reduction in the level of shareholding.

Required:
(ii) Calculate Maria’s after-tax proceeds per share if she sells:
(1) 2,700 shares back to Granada Ltd; and alternatively
(2) 3,200 shares back to Granada Ltd. (4 marks)