(b) Donald actually decided to operate as a sole trader. The first year’s results of his business were not as he had
hoped, and he made a trading loss of ￡8,000 in the year to 31 March 2007. However, trading is now improving,
and Donald has sufficient orders to ensure that the business will make profits of at least ￡30,000 in the year to
31 March 2008.
In order to raise funds to support his business over the last 15 months, Donald has sold a painting which was
given to him on the death of his grandmother in January 1998. The probate value of the painting was ￡3,200,
and Donald sold it for ￡8,084 (after deduction of 6% commission costs) in November 2006.
He also sold other assets in the year of assessment 2006/07, realising further chargeable gains of ￡8,775 (after
indexation of ￡249 and taper relief of ￡975).
Required:
(i) Calculate the chargeable gain on the disposal of the painting in November 2006. (4 marks)