Commentary

C2.1151 Indirect disposals—property richness test

Capital gains tax
Capital gains tax | Commentary

C2.1151 Indirect disposals—property richness test

Capital gains tax | Commentary

C2.1151 Indirect disposals—property richness test

It is only disposals made on or after 6 April 2019 of rights or interests in companies that are 'property rich' that are within the charge to tax. A company is 'property rich' for these purposes if at least 75% of the total gross market value of the company's 'qualifying assets' derives directly or indirectly from interests in UK land1.

The market value of a company will include its own market value, and that of other assets it has a right or interest in. Market value may be traced through any number of companies, partnerships, trusts and other entities or arrangements (whether established in the UK or not). However, tracing cannot be made through normal commercial loans. A normal commercial loan is one that meets the provisions of CTA 2010, s 158(1)(b) or CTA 2010, s 159(4)(b), see D2.2062.

There is an exemption for disposals of rights or interests in property rich companies where the underlying UK land is used for the purposes of a qualifying trade (see C2.1152) and an exception to the general property richness test where two or more disposals are linked (see below).

Determining market value—property richness test

Strictly the test uses the market value of the qualifying assets at the time of disposal.

However, HMRC has confirmed that any method for establishing the value of UK land and other assets that would be acceptable for general capital gains purposes will be acceptable for this test. Ideally, those values will have been determined at or

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