CGT Flashcards
(11 cards)
Gain for CGT purposes
the increase in value of the asset from the date of acquisition to the date of disposal
acquisition value
price paid for asset
CGT is charged on the disposal of
non-cash assets
Effect on CGT if beneficiary varies their inheritance
under s.62, if a beneficiary wants to give away their inheritance and avoid a CGT charge, the gift is ‘written-back’ to the deceased’s date of death and treated as having been made by the deceased
To make a variation, an original beneficiary who lacks capacity must obtain
the court’s consent
Max. number of times an asset can be varied
Once only - a second variation will not be effective for tax purposes
If the original beneficiary makes a variation of property but continues to enjoy the property, have they made a GROB?
No because the effect of the writing-back provisions is to treat the arrangement as a disposition by the deceased, the original beneficiary is not the donor of the property and therefore cannot retain any benefit
A disclaimer
similar to a variation, operates as a refusal to accept property to which a beneficiary is entitled
Limitations of disclaimers
A beneficiary can only disclaim before acceptance;
A beneficiary can only disclaim the whole gift (not partial);
The original beneficiary cannot control who receives the assets they disclaim.
Why are variations typically preferred to disclaimers?
significantly fewer practical limits
CGT impact on precatory trusts
Treated as though the original beneficiary made the distribution so CGT does arise (but IHT doesn’t). However, transfer window is usually so slight that CGT does not significantly arise.
