Tag Archives: capital gains tax

Trust for the kids: What could possibly go wrong?

A parent with sufficient means may sometimes wish to transfer an income producing asset. For example, mother may wish to transfer investment property in London into a discretionary trust for her daughter (e.g. to help cover university costs or supplement income when buying her own home and/or starting a family). However, there are various tax… Read More »

Purchase of own shares: Worth the bother?

For individual shareholders of family or owner-managed trading companies, a company purchase of own shares (CPOS) can be a useful ‘exit’ strategy in the right circumstances, subject to certain company law requirements being satisfied. Income or capital? When the company buys back its own shares from the shareholder, any ‘premium’ (i.e. payment exceeding the capital… Read More »

The ‘forgotten’ CGT relief

Many individual business owners are aware that a capital gains tax (CGT) rate of only 10% can apply if business asset disposal relief (BADR) (previously known as entrepreneurs’ relief (ER)) is available on qualifying business disposals, up to a lifetime limit. A major ‘headline grabber’ was the Chancellor’s announcement in the March 2020 Budget that… Read More »

It’s a ‘business’: HMRC says so!

It might be considered straightforward enough to identify a ‘business’. However, that is not necessarily the case. HMRC will not give advance clearance on whether activities constitute a business. However, this question can be important for various tax purposes. An important issue For example, whether a business exists is a potential issue for many buy-to-let… Read More »

Holiday homes: A CGT solution?

The landlord of a furnished holiday letting (FHL) that satisfies certain conditions can potentially benefit from ‘special’ tax treatment and certain tax reliefs, which landlords of other properties cannot access. Does it qualify? The requirements for a furnished property to be ‘qualifying holiday accommodation’ are beyond the scope of this article, but the three basic… Read More »

PPR relief: Evidence is key!

Most individuals owning a house will be aware of the principal private residence (PPR) relief rules for capital gains tax purposes. The PPR rules require that the dwelling has been occupied as the individual’s only or main residence at some point during their period of ownership (TCGA 1992, s 222(1)). Two fundamental requirements sometimes overlooked… Read More »

Don’t forget goodwill!

The valuation of assets can be important for tax purposes. For example, a valuation may determine the amount of inheritance tax (IHT) payable on a lifetime transfer (e.g. the transfer of an investment property to a discretionary trust), or on an individual’s death estate. In addition, an asset valuation may be needed to determine the… Read More »

PPR relief: A ‘residence’ or a quick profit?

The principal private residence (PPR) relief rules for capital gains tax purposes require a dwelling to have been a ‘residence’ of the individual to whom the gain accrues (TCGA 1992, s 222(1)). What is a ‘residence’? The term ‘residence’ is not defined in the PPR relief legislation. However, case law indicates that the requirement for… Read More »

CGT annual exemption: Little by little?

The capital gains tax (CGT) annual exemption is a welcome and useful tax break for many taxpayers. It is generally available to individuals (i.e. £12,300 for 2021/22), personal representatives (for the tax year of death and the two following years) and trustees (albeit the maximum entitlement is generally one-half of the exemption for individuals; see… Read More »