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Any Answers Answered: CGT and failed PETs


With the Spring Budget behind us, TAXtv’s Giles Mooney and Tim Good look at two questions from the pages of Any Answers. The first concerns capital gains tax on discounted sales, while the other is about failed potentially exempt transfers (PET).

15th Mar 2024
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To view the full questions and AccountingWEB readers’ answers click on the links below. To watch the video, click the play icon in the box above.

Capital gains tax on discounted sales

The first question came from David Ross. He said: “A soft-hearted client has agreed to sell a let property to her tenants at an under-value price and will not believe me when I tell her that, as they are not connected persons, she only has to pay capital gains tax (CGT) on the actual proceeds. The tenant’s lender is stating the market value as the sale price and demanding that my client sign a ‘gift of equity’ document. 

“My problem is that the client has phoned HMRC and they are reading from the HMRC website: ‘In some situations you should use the market value of the property when working out your gain. Do this if you sold it for less than it was worth to help the buyer.’

“To me it is simple – sales at under-value to unconnected persons are not a CGT problem. What does the community think?”

Failed PET of property used in personal business

“My client owns property used by his business, so the property would be eligible for 50% business property relief,” wrote happybird. “He has gifted the property to his kids as a potentially exempt transfer (PET), but the business continues to use it. If the client dies within seven years, the PET fails. Is the property still a relevant business property?”

For the latest episode of TAXtv visit PTP Interactive.​ TAXtv is a monthly tax update programme available as an annual subscription (11 issues plus budget editions) to view online, download from the internet or watch on DVD.

Replies (2)

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By Justin Bryant
16th Mar 2024 18:47
Thanks (0)
By Paul Crowley
03rd Apr 2024 00:14

Much appreciated.

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