Commentary

B5.840 Charity capital gains tax

Business tax
Business tax | Commentary

B5.840 Charity capital gains tax

Business tax | Commentary

Capital gains of charities—Tax treatment

B5.840 Charity capital gains tax

Assets transferred to charities

Relief from capital gains tax is given for disposals of assets to a charity (or a CASC (see Division B5.9) or other body within IHTA 1984, Sch 3 (see C3.1903)) otherwise than by way of a bargain at arm's length1. Broadly, the disposal and acquisition are treated as made for such consideration as gives rise to neither a gain nor a loss, unless any consideration actually paid exceeds the allowable deductions2. For further detail, see C3.1902. However, relief is not available where the donation is 'tainted'3, see B5.852.

This exemption is extended where a charity (or CASC or other body within IHTA 1984, Sch 3) becomes absolutely entitled to settled property (otherwise than on the termination of a life interest on the death of the life tenant), provided no consideration is received in connection with the transaction. In such cases, the deemed disposal and reacquisition of the property by the trustees4 are also treated as having been made for such a consideration as gives rise to neither a gain nor a loss5. (In general, no chargeable gain arises where a life interest terminates on death, but see I5.1021 for exceptions6.)

Any subsequent disposal of the asset by the charity may be exempt within TCGA 1992, s 256 (as described below). However, where the gain is chargeable, any holding period before the asset was transferred on a no gain/no loss basis to the charity is ignored in calculating

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