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Legal Terms - Disposal
While capital gains tax (CGT) is imposed upon the disposal of an asset, legislation does not provide a definition for disposal. The receipt of a capital payment concerning an asset may be regarded as a disposal for the purposes of Capital Gains Tax (Taxation of Chargeable Gains Act 1992 § 22). When an asset is conveyed to trustees, a disposal occurs regardless of the settlor.
The sole individual authorized to receive capital from the trust is identified (Re Paradise Motor Company Ltd [1968] 1 WLR 1125 (CA)). Conversely, a CGT disposal does not occur when an asset is conveyed to a nominee (Taxation of Chargeable Gains Act 1992 § 60). Death is not regarded as a means of asset disposal (despite revaluation), nor is the transfer of an asset from personal representatives to the beneficiary under a will or intestacy.
A disposal under an unconditional contract occurs at the time the contract is executed, whereas a disposal under a conditional contract transpires upon the fulfillment of the specified condition.
A distinction may exist between the individual executing the disposal and the individual accountable for the tax obligation. In Jerome v Kelly [2004] UKHL 25, [2004] STC 887, the disposition was executed by an individual who subsequently assigned his interest to trustees; the House of Lords determined that the tax burden was incurred by the trustees, rather than the individual who executed the sale.
Specific events are classified as disposals for Capital Gains Tax (CGT) purposes, resulting in a capital gain. This encompasses the demise of a life tenant of a trust and the vesting of a beneficial interest in property upon a beneficiary attaining the age stipulated in the trust deed.
While capital gains tax (CGT) is imposed upon the disposal of an asset, legislation does not provide a definition for disposal. The receipt of a capital payment concerning an asset may be regarded as a disposal for the purposes of Capital Gains Tax (Taxation of Chargeable Gains Act 1992 § 22). When an asset is conveyed to trustees, a disposal occurs regardless of the settlor.
The sole individual authorized to receive capital from the trust is identified (Re Paradise Motor Company Ltd [1968] 1 WLR 1125 (CA)). Conversely, a CGT disposal does not occur when an asset is conveyed to a nominee (Taxation of Chargeable Gains Act 1992 § 60). Death is not regarded as a means of asset disposal (despite revaluation), nor is the transfer of an asset from personal representatives to the beneficiary under a will or intestacy.
A disposal under an unconditional contract occurs at the time the contract is executed, whereas a disposal under a conditional contract transpires upon the fulfillment of the specified condition.
A distinction may exist between the individual executing the disposal and the individual accountable for the tax obligation. In Jerome v Kelly [2004] UKHL 25, [2004] STC 887, the disposition was executed by an individual who subsequently assigned his interest to trustees; the House of Lords determined that the tax burden was incurred by the trustees, rather than the individual who executed the sale.
Specific events are classified as disposals for Capital Gains Tax (CGT) purposes, resulting in a capital gain. This encompasses the demise of a life tenant of a trust and the vesting of a beneficial interest in property upon a beneficiary attaining the age stipulated in the trust deed.
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