Anti Avoidance For Capital Gains Tax

Anti Avoidance for Capital Gains Tax

Capital gains tax is levied on gains made by an individual but there are situations where instead of Capital Gains Tax (CGT), Income Tax may be charged.

For this to happened ALL of the following conditions must all met:

1. The main object, or one of the main objects, of the transactions or arrangements must be the avoidance or reduction of liability to Income Tax.
2. The individual must be carrying on an occupation wholly or partly in the UK.
3. Transactions or arrangements must have been effected putting some other person in a position to exploit the earnings capacity of that individual.
4. A ‘capital amount’ must have been obtained by the individual or for some other person, as part of, or in connection with, or in consequence of the transactions or arrangements.

Please see our Capital gains tax page to know more.

The charge to Income Tax will take place in the tax year or years in which the capital amount becomes receivable or the sale or realization occurs.

There are anti-avoidance provisions that are aimed at arrangements where an individual gives up the prospect of future income but, either he or some other person, receives instead a ‘capital amount’. https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg14325

If you are looking to know about this; feel free to contact us.