Capital gains/losses meaning

Checklist of key tax considerations relevant to share issues Structured as a table, this checklist clearly outlines key tax considerations specifically in respect of share issues...

From 6 April 2011, a stricter penalties framework has applied to an individual’s tax position where non-compliance involves an offshore matter or an offshore transfer. The operative dates for the different penalties, sanctions and criminal offence measures relating to offshore tax matters are as follows: Operative date 6 April 2011 — Section 35 and Schedule 10 to the Finance Act 2010 (FA 2010), together with the Finance Act 2010, Schedule 10 (Appointed Days and Transitional Provisions) Order 2011, SI 2011/975 — Offshore-focused penalties introduced for inaccuracies on returns, failures to notify and failures to submit returns for any tax year beginning on or after 6 April 2011 for the purposes of income tax and capital gains tax (CGT). See Practice Note: Penalties for offshore tax non-compliance—Scope of offshore penalties regime 27 March 2015 — Section 121 and Schedule 21 to the Finance Act 2015 (FA 2015), with Royal Assent on 26 March 2015 — Introduction of an aggravated penalty targeting the movement of concealed funds...

Evaluating a holding company jurisdiction This Checklist provides a practical template for assessing a prospective holding company jurisdiction from a tax standpoint and perspective. It should be carefully tailored to the specific deal at hand; to illustrate, rules on interest withholding are generally immaterial where no interest payments are anticipated in the circumstances. For a Practice Note that explains the general tax concerns, issues and aims summarised in this Checklist when selecting the location of a holding company or an intermediate holding vehicle for an international enterprise (or a segment of such an enterprise) or a fund, consult Practice Note: Holding company jurisdictions—tax considerations...

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 Trusts Court of Protection Elderly and vulnerable clients UK taxes for Private Client HMRC Manuals updates Tax avoidance, evasion and non-compliance Budgets and Finance Bills Contentious trusts and estates Pensions, insurance and tax efficient investments International Question of the week Additional Private Client updates this week Daily and weekly news alerts LexTalk®Private Client: a Lexis+® community New and updated content Dates for your diary Trackers Latest Q&As Useful information Trusts Insufficient credible evidence led to rejection of trustee expense claims (Hubbard v Hubbard) An account in common form concerning a trust holding development land, with trustees reporting to beneficiaries. The court determined the trustees failed to properly substantiate numerous costs, leading to substantial disallowances. Core principles include: trustees bear the onus to prove expenditure charged to the trust; poor or absent records are no excuse; and the court may grant a...

What changes to entrepreneurs’ relief were announced at the Budget 2018 and what was the motivation behind them? What is their likely impact? There will be three amendments to entrepreneurs’ relief in the Finance Act 2019. Diluted holdings The first reform permits a shareholder whose interest falls below the 5% qualifying threshold to elect to be treated as having disposed of, and immediately reacquired, their shares just before the dilution, effectively banking entrepreneurs’ relief for the qualifying holding period. The driver for this was a perceived obstacle to third-party investment in entrepreneurial businesses, where fundraising could push existing owners under the 5% line. In practice, the arrangement demands two distinct elections: one to crystallise the deemed sale and repurchase, and a separate one—on different deadlines—to defer the liability until an actual disposal, unless the person prefers to pay the capital gains tax upfront as a ‘dirty’ tax charge. Consequently, the approach is relatively intricate and uses two elections where one would do. It also necessitates...

In this issue: Budgets and finance bills Companies and corporation tax Employment taxes VAT Individuals and income tax Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Tax Highlights 2024/2025 Budgets and finance bills Progress of Finance Bill 2025 On 10–11 December 2024, the Committee of the whole House examined, without amendment, clauses on capital gains tax rates and reliefs, oil and gas, VAT on private school fees and SDLT. The committee stage is due to finish by 4 February 2025. National Insurance Contributions (Secondary Class 1 Contributions) Bill has third reading On 17 December 2024, the National Insurance Contributions (Secondary Class 1 Contributions) Bill was taken by a Committee of the whole House in the Commons. With no changes, it skipped report, had its third reading, and advanced to the Lords, receiving first reading on 18 December 2024. See: Tax—Finance Bill...

Stop Press : From accounting periods starting on or after 1 January 2026, the Diverted Profits Tax is superseded by the unassessed transfer pricing profits rules. This Practice Note, alongside Transactions in UK land—tax rules, examines the anti-avoidance provisions aimed at countering attempts to sidestep tax on income, profits or gains connected with arrangements concerning, or trades of dealing in, land. The main anti-avoidance measure seeks to treat gains of a capital character realised on the disposal of land as income, bringing them within income tax or corporation tax. Further detail appears in Practice Note: Transactions in UK land—tax rules. From 5 July 2016 these rules superseded and expanded the former transactions in land rules (for information on prior rules, see Practice Note: Real estate—anti-avoidance: disposals of land and taxing capital gains as income (pre 5 July 2016) [Archived])...

The enterprise investment scheme (EIS) It is primarily intended to boost investment in smaller, higher‑risk trading companies by granting a range of tax reliefs to individual investors who acquire newly issued shares in such companies. The EIS rules are prescriptive and contain numerous conditions that must be satisfied, including those relating to: the individual investors the issued shares the issuing company This Practice Note centres on the conditions that apply to the individual investor. Those conditions are outlined in the context of the income tax relief afforded by Part 5 of the Income Tax Act 2007 (ITA 2007). References to the equivalent capital gains tax (CGT) provisions are included where appropriate. For information on the remaining conditions, see the following Practice Notes: EIS—conditions for relief: issued shares, the funds raised and the arrangements in general EIS—conditions for relief: issuing company EIS—conditions for relief: qualifying trades For a summary of tax reliefs available...

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...

Archived: The ability to offer tax-favoured employee shareholder shares or ESS (commonly used in private equity company arrangements) has now been removed In the Autumn Statement 2016, the government confirmed that certain ESS-related tax reliefs would be withdrawn. The changes remove: The income tax and NICs relief applying to the first £2,000 of employee shareholder shares an individual receives The capital gains tax exemption in respect of all, or a portion, of ESS shares The provision ensuring that, when a company purchases employee shareholder shares from an employee shareholder, the consideration is not treated as a distribution in the shareholder’s hands The withdrawal of these reliefs applies to any employer shareholder agreements entered into on or after 1 December 2016. However, an individual who had obtained independent advice about entering an employer shareholder agreement before 23 November 2016 could still complete the agreement before 1 December 2016 and retain the beneficial income and CGT tax advantages...

Key points Residence determines the scope of a person’s liability to UK income tax and capital gains tax (CGT). An individual’s tax residence is established under the Statutory Residence Test (SRT). A person can be tax resident in multiple countries at the same time, as each jurisdiction applies its own domestic rules. Someone who is not resident in the UK is taxed only on UK‑source income and on certain gains from disposing of UK assets, including residential property. Value added tax (VAT), stamp duty land tax (SDLT) and the Annual Tax on Enveloped Dwellings (ATED) may apply to both residents and non‑residents. Before 6 April 2025, domicile—rather than residence—was the principal factor in determining exposure to inheritance tax (IHT). From 6 April 2025, IHT liability is largely linked to the period an individual has been resident in the UK. Residence of individuals—summary An individual’s UK tax residence is relevant when determining liability to income tax and CGT. Those...

Archived: This Precedent is for illustrative purposes only as it reflects the position up to 1 December 2016. The facility to issue tax‑favoured employee shareholder shares (ESS), frequently seen in private equity company arrangements, has now been withdrawn. In the Autumn Statement 2016, the government confirmed that the following ESS-related reliefs would be abolished: the income tax and NICs relief applying to the first £2,000 of employee shareholder shares allotted to an individual the capital gains tax exemption covering some or all of the ESS shares the rule ensuring that, where a company buys back employee shareholder shares from an employee shareholder, the price paid is not treated as a distribution in the shareholder’s hands These withdrawals apply to any employer shareholder agreements entered into on or after 1 December 2016. Nonetheless, any person who obtained independent advice about entering into an employer shareholder agreement before 23 November 2016 could still complete the agreement before 1 December 2016 and retain the...

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...

We take it that both buyer and seller are unconnected third parties, dealing at arm’s length for these purposes; the asset being conveyed is situated in England and Wales; and the effective date is the date of completion. Although the seller might have a charge secured over its interest in the property, that does not automatically mean the sale to the buyer is caught by that charge by itself. Whether it is depends on what the parties agree. As a rule, a transfer is not taken subject to an existing mortgage. The notes below consider a transfer that is subject to a mortgage, and one that is not. Transfer subject to seller’s existing mortgage Where a property is conveyed to a buyer subject to the seller’s subsisting mortgage, the purchaser assumes the seller’s liability...

A lease is treated as surrendered when it is handed over to the immediate superior interest. Surrendering a lease entails both a disposal by the tenant and a corresponding acquisition by the landlord, and it gives rise to capital gains tax (CGT) accordingly...