Capital gain meaning

Flowchart This Flowchart sets out the procedural steps where a claim arises under the Inheritance (Provision for Family and Dependants) Act 1975 (I(PFD)A 1975). For additional guidance on I(PFD)A 1975 claims, please refer to: Family provision claims—overview...

If companies A, B and C are within the same capital gains group, and company A passes its shares in company B to company C in return for an issue of shares by company C to company A, the transaction can have the following tax effects: any chargeable gain potentially arising to company A could be exempt under the substantial shareholdings exemption (SSE) in Schedule 7AC to the Taxation of Chargeable Gains Act 1992 (TCGA 1992). For guidance on when the SSE applies to a disposal of shares, see Practice Note: Substantial shareholdings exemption for tax purposes, the share exchange might be treated as not involving a disposal by company A of its shares in company B, provided the conditions in TCGA 1992, s 135 are met and the anti-avoidance condition in TCGA 1992, s 137 does not apply...

In this issue: Employment taxes Companies and corporation tax VAT Budgets and Finance Bills International Real estate tax Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Employment taxes Court of Appeal dismisses ‘discontinuous contract of employment’ while confirming need for causal link to carelessness for extension of assessment timeframe (Mainpay Ltd v HMRC) In Mainpay Ltd v HMRC [2025] EWCA Civ 1290, the Court of Appeal confirmed that extended assessment time limits apply where there is carelessness, and held that sporadic work under one contract is not continuous employment. HMRC was required to demonstrate a sufficient causal connection between taxpayer carelessness and the tax lost to justify using the longer time limits, and in this instance it satisfied that requirement. See News Analysis: Court of Appeal dismisses ‘discontinuous contract of employment’ while confirming need for causal link to carelessness for extension of assessment timeframe...

Dialog Semiconductor Ltd v HMRC [2025] UKFTT 1188 (TC) The appellant sought to purchase Atmel, a US microchip manufacturer, and the parties signed a merger agreement. Under that deal, Atmel was barred from inviting competing bids; however, where an unsolicited superior proposal arose, it could terminate by paying a US$137m termination fee, subject to the appellant’s right to match. In due course, a better bid materialised and Atmel ended the agreement and paid the fee. Following an enquiry, HMRC issued a closure notice assessing the fee to corporation tax as a chargeable gain under section 22 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), on the basis it was a capital sum derived from an asset. The notice was appealed. It was agreed in advance of the hearing that the FTT would address only whether the fee came within s 22(1)(c) as a capital sum ‘received in return for forfeiture or surrender of rights, or for refraining from exercising rights’. HMRC maintained that, if the FTT found...

See Q&A: If a person has owned and lived in a property as their primary home for the entire time they held it, can principal private residence relief apply to the gain when that property is split into two self-contained flats and each flat is subsequently sold to different purchasers?...

Introduction to Musharaka—a profit and loss sharing instrument of Islamic finance At the heart of Islamic finance lies the maxim ‘no profit without risk’, ie no person should realise a gain unless they bear some degree of risk. This concept is most clearly shown through the application of profit and loss sharing instruments. For further detail on this principle, see Practice Note: Key principles of Islamic finance. This Practice Note examines Musharaka, an Islamic finance technique originally founded on profit and loss sharing and broadly analogous to a conventional partnership arrangement. In straightforward terms, a Musharaka is a partnership customarily entered into by two or more parties, not necessarily for a fixed term, and most commonly for the purpose of undertaking a business venture. In a typical Musharaka, each participant makes a capital contribution to the venture and profits and losses are shared between them. A comparable Islamic finance arrangement premised on the same profit and loss sharing rule is Mudaraba, a special form of partnership in which only...

Trustees and personal representatives can, in fact, carry on a trade. For example, where a self-employed trader dies, the personal representative may keep the business running until it is wound down or sold. In the same way, trustees or interest in possession beneficiaries might be trading and could qualify for reliefs such as roll-over relief or business asset disposal relief. The broad tax rules governing trading apply to all traders alike, whether they are individuals, trustees, or personal representatives. This Practice Note sets out those principles below. Is there a trade? The key issue to examine is whether there is a trade. At times this will be clear, for instance when personal representatives step in to continue the deceased’s business; however, in other situations even a solitary transaction can amount to a trade. As an illustration, trustees who buy a property to renovate may, depending on the circumstances, be regarded as operating a property development business. If so, any gain on the later sale would fall within income...

For both the investing private equity fund and the target’s leadership, the prime lure of a private equity-backed buyout is the chance to crystallise a meaningful gain on exit. There are several potential paths to exit from such an investment, most typically: a trade sale to another company operating within the same sector, a flotation (IPO), or a secondary buyout (SBO). The ultimate route will hinge on considerations such as public market appetite for a listing and whether credible purchasers are available. Management often influence the decision, and may favour renewed private equity support via an SBO when the business model and prevailing market backdrop align. A secondary buyout (SBO) is, in essence, a private equity-backed acquisition of a company that has already undergone a private equity-backed buyout. In an SBO, the existing private equity owner exits its stake, though the current management team can remain in post afterwards. Alternatively, fresh management might be appointed, or a blend of old and new...

CGT-a summary This guide provides an overview of capital gains tax (CGT). In essence, CGT arises when an asset or property is disposed of and the proceeds exceed the original acquisition costs. The surplus is the gain subject to CGT, although various exemptions and reliefs may, depending on the circumstances, reduce or remove that chargeable amount. Disposal A disposal includes both a sale and a gift. For sales, the disposal proceeds are generally the sale price; however, specific rules can substitute the market value where the transaction is with a connected person. For gifts, the market value of the asset or property is treated as the disposal proceeds. If the sale price is below market value-so part sale and part gift-the market value may replace the actual proceeds, depending on the facts. Acquisition costs The acquisition costs will typically be the amount paid to purchase the asset or property, but, similarly to the position outlined above, where the asset or property was...

Sale by PRs or appropriation to beneficiaries We understand you are asking when it is better for the personal representatives (PRs) to dispose of an estate property, or instead to appropriate it to the beneficiaries so that they handle the sale themselves. This choice typically arises where: the beneficiary(ies) has/have part or all of their capital gains tax (CGT) annual exemption available the beneficiary(ies) will pay CGT at 18% on any part of a gain the beneficiary(ies) has/have losses available to offset against any gain the sale will make a loss and the PRs will not be making any further disposals that may produce gains to utilise the loss A death is not usually a chargeable occasion for CGT. For these purposes the PRs are treated as acquiring the assets at market value on the date of death; effectively, all prior accrued gains are eliminated and the PRs start again with a clean slate...