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When does CGT kick in: at assignment price or selling price?

Question:

I have exchanged on an off-plan flat in Burnley and would like to assign it before completion to my daughter, who is a first-time non-resident buyer. Whilst she need not pay any stamp duty land tax (SDLT) etc., will she be liable to pay capital gains tax (CGT) if she sells after two or three years to fund her university education? If so, would the CGT be applied to the full selling price (as it is a gift) or only applied to the gains after market value at the time of assignment? For example, if I buy it for £250,000, assign it when it's worth £260,000, and she sells it two years later at £300,000, how much would the CGT be? 

Arthur Weller replies:  

When you assign this property to your daughter, she is deemed to acquire it at market value, which, here, is £260,000. If afterwards, she sells it for £300,000, she will be liable to CGT on a capital gain of £40,000. See the end of the first paragraph of HMRC's Capital Gains manual at CG14530. When you assign to your daughter, I assume you do so for no consideration, so there is no SDLT for her to pay. 

I have exchanged on an off-plan flat in Burnley and would like to assign it before completion to my daughter, who is a first-time non-resident buyer. Whilst she need not pay any stamp duty land tax (SDLT)

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This question was first printed in Property Tax Insider in August 2021.