Help on CGT - small part disposals BPP study text qu 12

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Help on CGT - small part disposals BPP study text qu 12

Postby serenlas » Sat Feb 13, 2010 1:37 pm


I'm probably being really thick - it is the weekend after all. I'm hoping that someone can explain something in the answer to the question.

In the question there is a part disposal of 4 acres of land for £40,000. This was part of a 10 acre plot of land acquired for £20,000. The remaining 6 acres was valued at £24,000 when the 4 acres was sold.

The person selling the land is married and her husband hasn't made any capital disposals in the year.

The first part of the question is to calculate the taxable gain - I'm fine with that part.

The second part is to advise on any steps which could be taken to reduce the capital gains tax liability. The answer for this part talks about small part disposals, which I understand. However I'm confused about this bit:

"It might have been possible to have transferred part of the land to Terry so that he could make a disposal which would fall within the limits . If the land retained is valued at £24,000 the part transferred to him would have to be valued at less than £30,000 so that the disposal was of less than 20% of his holding."

I can't see where they get the £30,000 from. I can see that it is the value of the remainder multiplied by 100/80 but why does that equal the maximum she should transfer to him?

Any light that could be shed would be helpful. Sorry again if it's really obvious, I just haven't got my clear thinking head on.

Thanks in advance,
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