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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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).
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.
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.
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.
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).
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.
£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.