Calculating CGT -very rusty on this!!

Whether the PA is used before carry over a reduced gain into the trust?

Didn't find your answer?

Property is bequeathed to an idividual for  £100,000 say in 2011 and put into a trust in 2014 when market value is £150,000. PA is £11,000 in tax year 2014-15, is the carried over gain into the trust £50,000 or the amount that would have been taxable of £39,000?

So when sold by trust for £200,000 in 2016 is the gain before Trust PA of £5,500 £100,000 or £89,000?

I think probably simple but my last experience of CGT and trusts were many years ago.

 

All help gratefully received!!

 

thanks in anticipation,

 

 

Brendan

 

 

 

Replies (8)

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By Mark Ferbert
30th May 2017 16:57

Assuming there was a valid hold over election made on the property going in to the Trust in 2014/15, then the whole gain has to be held over - you can't disclaim part of the holdover relief just to utilise the annual exemption.

If there was no holdover claim, then the transferor would have been taxed on a gain of £39k in 2014/15, and the Trust will now be taxed on a gain of £50k (less the annual exemption).

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Replying to Mark Ferbert:
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By Dick Stastey
31st May 2017 09:53

It is possible to effectively disclaim holdover relief. If the asset is sold to the trust for £11,000, then there is still an £11,000 chargeable gain for the individual after holdover relief, thus utilising the annual exemption, and creating additional base cost for the trust.

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Replying to Dick Stastey:
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By Tax Dragon
31st May 2017 16:19

Dick Stastey wrote:

It is possible to effectively disclaim holdover relief. If the asset is sold to the trust for £11,000, then there is still an £11,000 chargeable gain for the individual after holdover relief, thus utilising the annual exemption, and creating additional base cost for the trust.


You mean £111,000.
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Replying to Tax Dragon:
By SteveHa
31st May 2017 16:23

Tax Dragon wrote:

Dick Stastey wrote:

It is possible to effectively disclaim holdover relief. If the asset is sold to the trust for £11,000, then there is still an £11,000 chargeable gain for the individual after holdover relief, thus utilising the annual exemption, and creating additional base cost for the trust.

You mean £111,000.


He probably meant £11,100.
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Replying to SteveHa:
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By Tax Dragon
31st May 2017 16:52

DS can speak for him/herself, but in view of s260(3),(4) and particularly (5), £111,000 would be the right number to have yielded a gain of £11,000 after holdover (limiting the facts to those given).

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Replying to Tax Dragon:
By SteveHa
31st May 2017 20:53

Apologies, I read your response in the wrong context :(

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By SteveHa
31st May 2017 09:22

Don't forget that the exemption available to a trust is half of that available to an individual unless the trust is for the benefit of a disabled person.

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By Dick Stastey
01st Jun 2017 10:37

£111,000 is what I meant (for the sale proceeds figure, producing a gain after holdover relief of £11,000), and that, together with the OP working on a figure of £11,000, was why I ignored the odd £100 in the annual exemption. £111,100 seemed overly precise.

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