Section A

Elena sold an antique weaving loom (a tangible movable property) for £6,500. She had originally purchased it at an auction for £3,000.

What is Elena's chargeable gain on the disposal of the loom, before any annual exempt amount?

An antique loom is a chattel (tangible movable property). Because the proceeds (£6,500) exceed £6,000, it is not entirely exempt. The actual gain is £6,500 - £3,000 = £3,500. The marginal relief limits the gain to 5/3 x (Proceeds - £6,000) = 5/3 x (£6,500 - £6,000) = 5/3 x £500 = £833. The chargeable gain is the lower of the actual gain and the marginal relief limit, which is £833.