Business asset disposal relief (BADR) is a very popular relief for individual business owners, offering a capital gains tax rate of only 10% on chargeable gains from qualifying business disposals, subject to a lifetime limit of £1 million (for 2022/23). A ‘business’ for BADR purposes means anything which is a trade (or profession/vocation), and is… Read More »
A company purchase of own shares (CPOS) is often a tax-efficient way for an individual shareholder to dispose of their shares (e.g., on retirement). However, unexpected tax consequences can arise if a CPOS is not handled correctly. Income treatment As a general rule, when the company buys back its own shares from the shareholder, any… Read More »
Business asset disposal relief (BADR) offers a capital gains tax (CGT) rate of 10% on net chargeable gains of up to £1 million (for 2022/23). A claim for BADR is available on a material disposal of business assets, such as an individual’s company shares, where certain conditions are satisfied. Trading company? For an individual shareholder… Read More »
Relief on the disposal of a private residence (or ‘principal private residence (PPR) relief, as it is commonly known) is sufficient to shelter gains on the disposal of an individual’s only or main residence from capital gains tax in most instances, where the qualifying conditions are satisfied. Is it permitted? One of the limitations in… Read More »
Sole traders or partnerships often incorporate, so that the business operates through a company. This can be done in various ways. What’s it worth? For example, the business proprietor(s) might sell the business to a newly-formed company for cash, with the proceeds being left outstanding on a director’s loan account for the proprietor(s) to withdraw… Read More »
Principal private residence (PPR) relief for capital gains tax purposes is available on most disposals by individuals of their dwelling-house. The assumption is normally that any capital gain will be subject to PPR relief. Unfortunately, this assumption is not always correct. Is it ‘occupied’? PPR relief broadly applies to gains accruing to individuals on the… Read More »
The end of a marriage (or civil partnership) is often difficult and stressful. Unfortunately, the tax rules could make a bad situation worse. Gifts of assets Where one unconnected individual gifts a capital asset to another individual, the gift is generally treated for capital gains tax (CGT) purposes as having been made at market value.… Read More »
A parent with sufficient means may sometimes wish to transfer an income producing asset. For example, mother may wish to transfer investment property in London into a discretionary trust for her daughter (e.g., to help cover university costs or supplement income when buying her own home and/or starting a family). However, there are various tax… Read More »
For individual shareholders of family or owner-managed trading companies, a company purchase of own shares (CPOS) can be a useful ‘exit’ strategy in the right circumstances, subject to certain company law requirements being satisfied. Income or capital? When the company buys back its own shares from the shareholder, any ‘premium’ (i.e., payment exceeding the capital… Read More »
When an individual sells shares in (for example) a family company, and the buyer is another company, instead of receiving all the proceeds in cash up front (and/or shares in the buying company) the vendor will sometimes receive ‘loan notes’ instead. Many loan notes are ‘qualifying corporate bonds’ (QCBs). A QCB is broadly a normal… Read More »