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Perhaps one of the hottest tax topics of the moment is capital gains tax.  A staple area of expertise for all members of Temple Tax, it has been thrown into the spotlight by the Government’s clear statement of intent that it is firmly ‘under review’.  Realistically, in the current climate that can only mean that the rates are going up and reliefs may be further circumscribed.  It will be more important than ever for practitioners to be totally on top of the subject.


Entrepreneurs' relief has dominated CGT mitigation over recent years.  Members of Chambers have been prominent in this area, lecturing widely on its application and possibilities, notably recently in relation to the difficult issues thrown up by last year’s changes to the 5% test, as well as the introduction of dilution relief and the problem of dilution on the day of sale.  ER has already this year been heavily cut back with the lifetime limit going down from £10m to £1m, but the issues remain.


Reliefs generally will become more and more important if the CGT rates go up.  The Enterprise Investment Scheme with its income tax and CGT reliefs is an area where members are constantly asked questions, especially as HMRC seem to be pulling back on their willingness to engage with the professions to assist with difficult areas: for example repaying loans to EIS subscribers, the risk-to-capital requirements and so on. 


Employee Ownership Trusts are on the increase and a subject of particular interest to Chambers.  The reduction in the scope of ER means that MBOs may well be moving even more in this direction, at least where the corporate ethos makes it a good fit, with many tax and accounting considerations to be balanced alongside the commercial. 


The truth is that capital gains’ issues arise all the time as part of the transaction-based advice that members routinely provide. 


  • Reconstructions will invariably involve intra-group transfer relief, SSE and reconstruction reliefs, as well as other tax implications such as the comparable reliefs under the intangibles code, stamp duty and SDLT. 
  • Purchases of own shares and returns of capital, rights issues and reorganisations, all continually raise interesting questions as to for example the availability of POS capital gains’ treatment for staged buy-backs, the status of a rights issue as a reorganisation and so on
  • Incorporation of property businesses is a multi-faceted topic and many taxes, including capital gains tax and the incorporation relief in s162 TCGA, impact this area. 
  • Land transactions invariably give rise to issues, for example when ‘pooling’ for land development, or indeed when considering whether a capital gain arises at all given the possibility of ‘trading’ or the application instead of the UK Transactions in Land provisions. 
  • Non-resident structures are potentially liable to tax on capital gains directly and indirectly arising in respect of UK land, as well of course now in respect of corporation tax itself. 
  • Principal private residence relief is another area of expertise within Chambers, with Ximena Montes Manzano being the author of Main Residence Relief (3rd Ed.).
  • Trusts and private client work involve regular detailed consideration of capital gains’ issues, whether as part of estate planning or the ongoing management of family trusts, family investment companies and so on – typically alongside IHT considerations, the ‘settlement’ provisions, and so on.

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