Question 2

Sue bought a shop in October 1993 for 190,000 and used it in her business until April 2006, when she gave it to her daughter Kira the market value of the shop at that time was 770,000.

Kira ran the shop as a sole trader for a while but decided to sell the shop in November 2020. She received 1,250,000 for the shop.

Sue and Kira claimed gift relief on the shop. Kira had no other disposals in 2020/2021.

Kira is a higher rate income tax payer.

Required

Calculate the Capital Gains Tax payable by Kira on her disposal of the shop:

1. Ignoring any Business Asset Disposal Relief (8 marks)

2. Assuming Kira is entitled to Business Asset Disposal Relief (1 mark)