Victoria disposes of some shares in ABC Ltd to which deferral
relief is attributable at a gain of £100,000. She held the
shares from 2 May 1998 until 2 May 2005, and they qualify as a
business asset for taper relief purposes throughout that period.
She invests £100,000 in shares in XYZ Ltd, and obtains
deferral relief by setting the expenditure on these shares against
the £100,000 gain on the ABC shares. The XYZ Ltd shares are
issued to her on 1 September 2004 and she disposes of them at a
gain of £50,000 on 2 May 2008. The shares do not qualify as a
business asset for any part of that period.
The £100,000 gain is brought back into charge on 2 May
2008. The qualifying holding period for taper relief purposes
begins with 2 May 1998 and ends on 2 May 2008. For taper relief
purposes, Victoria is treated as having disposed of an asset which
was a business asset shareholding for the seven years from 2 May
1998 until 2 May 2005, and a non-business asset shareholding for
the 3 years from 2 May 2005 until 2 May 2008. The £100,000
gain is therefore split pro rata into a £70,000 gain on a
business asset which has been held for 10 years, and a £30,000
gain on a non-business asset which has been held for 10 years.
The amount of this gain which is chargeable is £35,500,
being £17,500 (25% of £70,000) for the business asset
plus £18,000 (60% of £30,000) for the non-business asset
part.
