Question 1b ii
Answer

(b) Providing financial assistance to Josh – alternative strategies

(ii) Gift of shares in Far Ltd
CGT liabilities for Maia

Maia’s gift of the shares would be treated as a sale at market value for the purpose of calculating the chargeable gain.

Gift relief would be available because Far Ltd is an unquoted trading company.

£ £
Proceeds at market value 420,000
Less: cost
Market value on 1 November 2018 375,000
Less: gift relief in respect of earlier gift (140,000)
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(235,000)
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185,000
Less: gift relief (£185,000 x 84% (100% – 16%)) (155,400)
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Chargeable gain 29,600
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Entrepreneurs’ relief would not be available, regardless of whether or not Maia works for Far Ltd, because Maia will not have owned the shares for one year on 1 July 2019. Accordingly, as Maia is a higher rate taxpayer, her CGT liability would be £5,920 (£29,600 x 20%).

IHT implications for Maia and Josh
Business property relief would not be available because Maia will not have owned the shares for two years on 1 July 2019. Accordingly, the IHT implications would be the same as for the gift of the investment property, where it is not furnished holiday accommodation, as set out above.