The following is an illustration. In January, 1976 A buys a silver teaset for £1,600. In January, 1980 he sells part of that teaset for £1,000 and six months later he sells the rest to the same person for £1,400. The total chargeable gain is £800, even though neither sale has produced £2,000. The overriding limit on the tax chargeable is £200, that is the £2,400, the global sum received, and the £2,000 limit under section 17. The amount chargeable is allocated, and assuming by 1981 we have not yet changed the tax year, to the separate years of assessment by reference to the proportion of the total sale receipts applicable to each year.
The sale in January, 1980 would be attributable to the year 1980-81 and the gain would be five-twelfths of £800, that is £334. The following tax year, 1981-82, it would be seven-twelfths of £800, £466. When you add those two sums together, £334 and £466 you get the total figure of £800. If the tax chargeable on the two assessments taken together exceeds the overriding limit of £200, which I have already mentioned, the appropriate reduction in the tax would be made in the same proportions. The tax payable in the year 1980-81, assuming the alternative charge which would be applicable, would be £92. In the following year, 1981-82, the tax chargeable would be 26 per cent of £466 or £121, total tax liability of £213. The overriding limit is £200, half of the difference between £2,400 and £2,000 so we deduct that £200 from £213 which gives a figure of £13. The appropriate allocation of tax would be for the year 1880-81, £5 approximately, and for the following year, £8 approximately. Did I say the tax chargeable?
