Disposals of beneficial interests in settled property: What’s the CGT position?

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Disposals of beneficial interests in settled property: What’s the CGT position?

By Malcolm Finney, February 2020

Malcolm Finney considers if and when a capital gains tax charge arises on certain disposals relating to trust property.

Capital gains tax (CGT) is levied on capital gains arising on disposals (e.g. sales, gifts) of chargeable assets. 

Although an equitable interest in trust property is a chargeable asset, specific provision is made pursuant to which (except in certain circumstances) no chargeable gain is to be treated as arising on the disposal of such an interest. 

No chargeable gain arises, assuming the disposal is made by the beneficiary for whom the equitable interest was initially created or by a beneficiary who did not acquire the interest for consideration, whether in money or money’s worth (i.e. purchase the interest).

Example1: Fixed interest trust

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