Most readers have probably heard of Capital Gains lax (CGT) but how need to be substituted in place of the amount recelved (somuch do you know about the situations in which CGT is charged? You basically, the amount received is irrelevant). If necessary, HMRCCO d be for iven fr thinking hat CGT son y pon ble when you seanasset which is chargeable to CGT (eg.asental property) and redisea profif on the sale. But did you know that CGT can also be payablewhen you make a gift of an asset to, say, a family member? You arenot alone if this comes as a surprise to you and it is therefore worthexamining some such stuations that may give rise to an unexpectedCGT icbilitycon instruct the District Voluer togivo their o in on on the mar etvalue of land and buildings etc, so you would need to makesure you know what the market value of the asset is before you" ^ " 'ceOUNTANTSCK^^t..ED  ADVISEASOriginated 141proceed with the transactionIt should clso be noted that even where two parties are notconnected ithe bargain is not at arm's length then the deemedproceeds for CGT purposes wil still be the market value of theasset, where the transaction has been a gitt or a transfer atAny transter of an asset by an indlvidual to a 'connected person isdeemed to take place at market value for CGT purposes. This appliesto any asset which is a chargecble asset for CGT purposes, such as a There can be certain mechanisms which can be used to mitigaterental property, land, certain stocks and shares etcThe eflect of these rules is that a CGT calculation is carried out for the always be needed in each situation. In some cases, the use of atransfer but in place of sale proceeds received, the market value s Trust can be helipful since it can be possible to transfer an asset toincluded insteod. Take the example of a rental property which you Trust (for the ultimate beneft of a family member, for example)want to gitt to your son and let's assume you bought t for $150000 ten without giving tise to an immediate CGT liablity.years ago, have never lived in it, and i is now worth $200000. Eventhough you are not recelving any sale proceeds from the transfer, theincrease in value of 5500000 would be chargeable to CGT and youthe CGT lability on any such transfers but specific advice wilIf an asset qualifies as a business asset eg. shares in a familytrading company or a share in a trading partnership etc. then theCapital Gain which would otherwise be chorgeable on a gift ofsuch an asset can aso be postponed and effectively passed ont Pearson May we specialisea full range of accountancyervices to help you maximiseyour profits and minimise thetax you have to payicouid end up paying as much os $14000 in CGrDoas this maan I havn to DaY CGT when Itransfer any charnable to the recipient of the asset. Again, the rules can be complex sospecific advice for each situation will be required.The definition of connected persons for these purposes Includesspousesy/civil partners, parents, grandparents (and remoter suchoncestors) children, grandchildren and further issue, brothers & sisters In brief, yesi Although beyond the scope of this article, giftsand spouses/civi portners of most of these relatives as well, It thereforeencompasses most close family members. Care should olso be Inheritance Tax implications and these should not be overlookedtaken if transferring assets to a company which you control(possibly Where the transaction involves land o buildings ond there iswith family members) since this could aso be a transfer between on element of consideration Stamp Duty Land Tax should alsoconnected personsand transfers at undervalue of certain assets will often haveChippenham01249 444666be considered. Finally, where the asset generates income, theBath01225 460491Trowbridge01225 764441You should aso note that even though spouses and cvil partners are ncmtox implications to both the recipient and the transferorincluded in the definition of connected persons, special rules apply in will need to be taken in to account.this situation and any transactions between spouses/civil partners do The above is for general guidance only and no action should benot give rise to a gain or a loss for CGT purposestoken without oblaining specific odvice.Jacqui Bowden BSc(Hons) ACACCOUNAIR WWw.pearsonmay.co.uk CiAEven where you receive some proceeds for the fronsfer of achargeable asset to a connected person, the market value wil always

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Most readers have probably heard of Capital Gains lax (CGT) but how need to be substituted in place of the amount recelved (so much do you know about the situations in which CGT is charged? You basically, the amount received is irrelevant). If necessary, HMRC CO d be for iven fr thinking hat CGT son y pon ble when you se anasset which is chargeable to CGT (eg.asental property) and redise a profif on the sale. But did you know that CGT can also be payable when you make a gift of an asset to, say, a family member? You are not alone if this comes as a surprise to you and it is therefore worth examining some such stuations that may give rise to an unexpected CGT icbility con instruct the District Voluer togivo their o in on on the mar et value of land and buildings etc, so you would need to make sure you know what the market value of the asset is before you " ^ " ' ceOUNTANTS CK^^t..ED ADVISEAS Originated 141 proceed with the transaction It should clso be noted that even where two parties are not connected ithe bargain is not at arm's length then the deemed proceeds for CGT purposes wil still be the market value of the asset, where the transaction has been a gitt or a transfer at Any transter of an asset by an indlvidual to a 'connected person is deemed to take place at market value for CGT purposes. This applies to any asset which is a chargecble asset for CGT purposes, such as a There can be certain mechanisms which can be used to mitigate rental property, land, certain stocks and shares etc The eflect of these rules is that a CGT calculation is carried out for the always be needed in each situation. In some cases, the use of a transfer but in place of sale proceeds received, the market value s Trust can be helipful since it can be possible to transfer an asset to included insteod. Take the example of a rental property which you Trust (for the ultimate beneft of a family member, for example) want to gitt to your son and let's assume you bought t for $150000 ten without giving tise to an immediate CGT liablity. years ago, have never lived in it, and i is now worth $200000. Even though you are not recelving any sale proceeds from the transfer, the increase in value of 5500000 would be chargeable to CGT and you the CGT lability on any such transfers but specific advice wil If an asset qualifies as a business asset eg. shares in a family trading company or a share in a trading partnership etc. then the Capital Gain which would otherwise be chorgeable on a gift of such an asset can aso be postponed and effectively passed on t Pearson May we specialise a full range of accountancy ervices to help you maximise your profits and minimise the tax you have to pay i couid end up paying as much os $14000 in CGr Doas this maan I havn to DaY CGT when Itransfer any charnable to the recipient of the asset. Again, the rules can be complex so specific advice for each situation will be required. The definition of connected persons for these purposes Includes spousesy/civil partners, parents, grandparents (and remoter such oncestors) children, grandchildren and further issue, brothers & sisters In brief, yesi Although beyond the scope of this article, gifts and spouses/civi portners of most of these relatives as well, It therefore encompasses most close family members. Care should olso be Inheritance Tax implications and these should not be overlooked taken if transferring assets to a company which you control(possibly Where the transaction involves land o buildings ond there is with family members) since this could aso be a transfer between on element of consideration Stamp Duty Land Tax should also connected persons and transfers at undervalue of certain assets will often have Chippenham 01249 444666 be considered. Finally, where the asset generates income, the Bath 01225 460491 Trowbridge 01225 764441 You should aso note that even though spouses and cvil partners are ncmtox implications to both the recipient and the transferor included in the definition of connected persons, special rules apply in will need to be taken in to account. this situation and any transactions between spouses/civil partners do The above is for general guidance only and no action should be not give rise to a gain or a loss for CGT purposes token without oblaining specific odvice. Jacqui Bowden BSc(Hons) ACA CCOUNAIR WWw.pearsonmay.co.uk Ci AEven where you receive some proceeds for the fronsfer of a chargeable asset to a connected person, the market value wil always

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