Question 3b ii
On 19 May 2011 Winston King disposed of a painting, and this resulted in a chargeable gain of £45,860. For the tax year 2011–12 Winston has taxable income of £22,400 after the deduction of the personal allowance.
Winston is considering the sale of a business that he has run as a sole trader since 1 July 2004. The business will be sold for £260,000, and this figure, along with the respective cost of each asset, is made up as follows:
| Sale proceeds | Cost | |
|---|---|---|
| £ | £ | |
| Freehold shop | 140,000 | 80,000 |
| Freehold warehouse | 88,000 | 102,000 |
| Net current assets | 32,000 | 32,000 |
260,000 |
The assets have all been owned for more than two years. The freehold warehouse has never been used by Winston for business purposes.
Where possible, Winston will claim entrepreneurs’ relief in respect of this disposal.
Required:
(ii) Calculate Winston King’s capital gains tax liability for the tax year 2011–12 if he sold his sole tradership business on 25 March 2012. (4 marks)