25 The White family

25 The White family

(a) Mr White was a sole trader for many years until he ceased to trade on 30 September 2013. He had bought a factory for use in his trade on 10 July 2007 for £150,000.

On 1 December 2013, Mr White gave the factory to his son, Gary. The market value of the factory at that time was £260,000. Gary let out the factory to an unconnected company from 1 December 2013. He sold the factory to a developer on 1 March 2014 for £320,000.

The factory is the only chargeable asset owned by either Mr White or Gary. Both Mr White and Gary are higher rate taxpayers.

Required

(i) Calculate the capital gains tax payable by Mr White and by Gary for 2013/14 if a claim is made for gift relief on the factory.

(ii) Calculate the capital gains tax payable by Mr White and by Gary for 2013/14 if no claim is made for gift relief on the factory.

In parts (i) and (ii), you should assume that any other available reliefs are claimed

(iii) From your calculations in parts (i) and (ii), explain why Mr White and Gary should not make a claim for gift relief on the factory.

Required

Explain the tax consequences of acquiring each of the shops.

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