Capital gains tax

The charge to CGT

The charge to CGT arises when a person disposes of an asset and makes a profit on the disposal that is capital in nature. For an overview of CGT as a whole (including its scope, reliefs and compliance), see Practice Note: Introductory guide to CGT. See also: Capital gains tax—client guide.

When deciding whether a charge to CGT arises, there are a number of aspects to consider.

The asset, the disposal and the person making the disposal must all be of a type that can attract CGT

CGT is payable by individuals, trustees and personal representatives (PRs). Companies generally do not pay CGT but are subject to corporation tax on their chargeable capital gains (although see below in respect of CGT payable on disposals of UK residential property owned by non-natural persons prior to 6 April 2019). In the context of UK real property and separately in relation to individuals who are deemed domiciled in the UK for CGT purposes on or after 6 April 2017, a person may be within the scope of CGT even where they are not UK resident

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All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

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