Capital transfer tax Definition

GLOSSARY

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What does Capital transfer tax mean?

A tax on lifetime transfers and on death. It was introduced in 1974 to replace estate duty, although it did not apply on death until 1975. It was substituted by inheritance tax following the Finance Act 1986, when the Capital Transfer Tax Act 1984 was renamed the Inheritance Tax Act 1984 (IHTA 1984).

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Cross-border inheritance tax issues

Cross-border inheritance tax issues FORTHCOMING CHANGE: Abolition of non-dom regime and introduction of residence-based IHT regime. At Autumn Budget 2024 on 30 October 2024, the Labour government confirmed that it will proceed with plans of the former Conservative administration to abolish the remittance basis of taxation and replace it with a residence-based regime, to commence on 6 April 2025. The government also confirmed its intention to move to a residence-based regime for inheritance tax. The changes will also affect the rules determining excluded property status, the Abolition of protected settlements status of offshore trusts, and changes to overseas workday relief. For information on these changes, including draft legislation published with Autumn Budget 2024, see: Autumn Budget 2024—Private Client analysis — International, Autumn Budget 2024 (paras 2.56 and 5.51), OOTLAR (para 1.3) and TIIN: Reforming the taxation of non-UK domiciled individuals. This Practice Note covers UK inheritance tax (IHT) issues in cross-border situations and deals with: actual and deemed domicile; double tax treaties and ...

Historical IHT planning schemes

Historical IHT planning schemes Introduction The core legislation found in the Inheritance Tax Act 1984 (IHTA 1984) and the former capital transfer tax regime contained an oversight. There was nothing to prevent an individual seeking to reduce exposure to inheritance tax (IHT) on death from making a lifetime gift (with the hope of surviving at least seven years) while continuing to have the use or enjoyment of the gifted asset. Under the legislation, it was therefore possible for an individual effectively to give away their home for IHT purposes while continuing to occupy it. The gift with reservation of benefit (GWR or GROB) provisions introduced by section 102 and Schedule 20 to the Finance Act 1986 (FA 1986) were designed to close this loophole. Where the GROB provisions apply, the gifted (or in some cases, substituted) property is generally treated as remaining part of the donor’s estate for IHT purposes while the donor continues to benefit. The provisions can apply if (among other things) an individual...

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Domicile and deemed domicile—client guide

Domicile and deemed domicile—client guide Key points • domicile is a legal status which links an individual to the laws of a particular jurisdiction—it is not the same as residence or nationality; • a person who is domiciled in the UK is subject to inheritance tax (IHT) on their worldwide assets; • individuals who are resident, but not domiciled in, the UK have a privileged tax status; in particular, they are eligible to be taxed on the ‘remittance basis’. What is domicile? Domicile is a legal status or kind of ‘personal law’ which links an individual to the laws of a particular jurisdiction. It is often the connecting factor which allows questions concerning personal status to be determined. For example, if a person dies domiciled in England without having made a will, whether or not they live here, English law will determine who can inherit their movable assets (broadly, any property other than land). It is not the same as the concept of ‘domicil’ of some European...

Asset purchase agreement—short form

Asset purchase agreement—short form This Agreement is made [insert day and month] 20[insert year] Parties 1 [insert name of selling corporate entity] a company incorporated in [England and Wales OR [insert country of incorporation]] under number [insert registered number] whose registered office is at [insert address] (Seller); and 2 [insert name of purchasing corporate entity] a company incorporated in [England and Wales OR [insert country of incorporation]] under number [insert registered number] whose registered office is at [insert address] (Buyer) [(each of the Seller and the Buyer being a Party and together the Seller and the Buyer are the Parties).] BACKGROUND (A) The Seller currently carries on the Business[ under the Business Name]. (B) The Seller has agreed to sell the Business (including the Assets) as a going concern to the Buyer subject to the terms and conditions in this Agreement. (C) [[insert further recitals if required]] The parties agree: 1 Definitions and interpretation 1.1 In this Agreement[ unless the context otherwise requires]: Accounts •...

Dive into our 2 Precedents related to Capital transfer tax

Can an unsecured, interest-free loan to a company be a chargeable lifetime transfer for inheritance tax purposes and does it make a difference if the loan is repayable on demand or is only repayable at predetermined future dates? Has HMRC given any view on this issue?

Can an unsecured, interest-free loan to a company be a chargeable lifetime transfer for inheritance tax purposes and does it make a difference if the loan is repayable on demand or is only repayable at predetermined future dates? Has HMRC given any view on this issue? An interest-free loan which is repayable at the end of a defined period of time is a disposition which reduces the value of the lender's estate by the difference between the initial sum lent loan and the discounted value of the repayment sum. The loan would therefore be a transfer of value. An interest-free loan which is repayable on demand by the lender should not reduce the value of the lender's estate. There was a

What were the rules for business property relief in 1982?

What were the rules for business property relief in 1982? History of relief When capital transfer tax (CTT) was first introduced there was agricultural relief but no relief for business assets, despite the fact that under estate duty there had been a relief for industrial hereditaments. However, this omission was soon rectified by the introduction of a relief for business property in the Finance Act 1976. When first introduced, for transfers made after 6 April 1976, it was a 30% reduction in the value transferred when attributable to sole businesses, partnership shares, land, buildings, machinery or plant used by a partnership in which the transferor was a partner or by a company which he controlled, or company shares comprised in a holding which

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Private Client weekly highlights—10 August 2023

This week’s edition of Private Client highlights includes: (1) Perry v Lopag Trust & another (No2) (Cayman Islands) interplay between finding of fact and foreign law; (2) DBT updates guidance on registration and verification of overseas entities; (3) testamentary capacity and undue influence turned on whether a pain medication had been taken on the day of execution; (4) DWP response and a further consultation on deferred small pension pots; (5) Bermuda considers introduction of corporate income tax; (6) undue influence found by testatrix’s daughter on re-hearing ordered by the Court of Appeal.

Private Client weekly highlights—13 July 2023

This week’s edition of Private Client highlights includes: (1) Unger (in substitution for Hasan) v Ul-Hasan (deceased), which involved proceedings under the Matrimonial and Family Proceedings Act 1984 after the death of a party; (2) updated guidance on the Register of Overseas Entities; (3) tougher legal sanctions for law firms who fail to properly screen clients connected to Russian government; (4) Meades v HMRC, in which the FTT held that the high income child benefit charge was due despite taxpayer’s remarriage; (5) Guy v Brake, which provides further guidance on challenges to mental health crisis moratoriums; (6) the Charity Commission publishes its 2022–23 annual report and accounts; (7) Fisher v Dinwoodie, a decision on fiduciary relationships and duties in a commercial context, and (8) a reminder that Legislation Day will take place on 18 July.

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