Capital gains tax (CGT) meaning

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...

ARCHIVED : This archived table sets out details of the renumbered provisions in the Taxation of Chargeable Gains Act 1992 (‘the Act’), arising from the redrafting of Part 1 of the Act by the Finance Act 2019. From 6 April 2019, Part 1 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992) was recast. The revised TCGA 1992, Pt 1 was brought in by section 13 and Schedule 1 of the Finance Act 2019, with the principal objective of bringing disposals of UK non-residential property by non-UK residents within scope of UK tax, so that disposals of both residential and non-residential UK property on or after 6 April 2019, subject to specified exemptions, fall within capital gains tax (CGT) or corporation tax on chargeable gains. The consequence is that UK residents and non-residents are equally within charge on disposals of any UK real property or on certain interests in UK property. For more detail on the chargeable gains position of non-residents with effect from 6 April 2019, see...

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...

The Chancellor of the Exchequer, Rachel Reeves, delivered the government’s Autumn Budget on 30 October 2024 Keenly awaited and watched, this was the first Budget from a Labour administration in fourteen years, and the first ever presented by a woman Chancellor. Many headline measures for Private Clients had been trailed in one form or another, and several of the changes—such as the Capital Gains Tax reforms—were not as draconian as many had feared, proving less severe than anticipated. It was definitely a Labour Budget, unmistakably Labour in flavour, with the Chancellor honouring election pledges not to raise income tax or National Insurance for ‘working people’, and instead securing the £40bn of tax rises by lifting employers’ National Insurance, narrowing the scope of IHT agricultural and business property reliefs, increasing CGT rates, reforming the taxation of carried interest, changing the rules for non‑UK domiciled individuals, bringing inherited pensions into the IHT net, confirming VAT on private school fees, increasing the SDLT surcharge for second homes, and even a hike in...

On 6 March 2024, Chancellor Jeremy Hunt set out the government’s Spring Budget amid a weak economic outlook and Conservative polling behind Labour ahead of the forthcoming general election. He had to juggle the political urge to woo voters through personal tax cuts with the constraint of the OBR’s latest fiscal headroom. With income tax reductions viewed as too expensive, reliefs targeted at squeezed households focused on further cuts to employees’ and self‑employed National Insurance contributions, reform of the High Income Child Benefit Charge, and a lower higher rate of Capital Gains Tax on residential property disposals. For Private Client lawyers, the most unexpected move was the abolition of the non‑UK domicile tax regime. In the months ahead, Private Client advisers will be busy guiding clients through the ramifications, and only time will show whether, under the proposed residence‑based approach, the UK remains appealing as a place to live for internationally mobile high net worth individuals. Many were also surprised by the ending of the current favourable tax treatment for...

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...

This Practice Note consolidates the HMRC Manuals tracker that featured weekly in the Private Client highlights from January 2021 to December 2024, arranged by HMRC Manual in reverse chronological order. It captures many of the key amendments to the HMRC Manuals set out below that will interest Private Client practitioners. For the combined tracker from January 2025 onwards, see Practice Note: Consolidated HMRC Manuals tracker 2025–26–Private Client. Avoidance Handling Process Manual Pages amended • Date of change • Comments Added: AHP1000, AHP1200, AHP1300, AHP1400, AHP1450, AHP2000, AHP2100, AHP2200, AHP2300, AHP3000, AHP3100, AHP3200, AHP3300, AHP3400, AHP3500, AHP4000, AHP4100, AHP4200, AHP4300, AHP4350, AHP4400, AHP4500, AHP4550 and AHP4570 Date: 29 September 2023 Summary: This new manual sets out HMRC’s method for managing tax avoidance risks across all taxes and HMRC directorates, aiming for consistency and effectiveness. The overview sections describe what HMRC regards as tax avoidance, as distinct from lawful tax planning. They also outline the role of iTAPE, a specialist network within HMRC that leads...

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...