Taxman unveils details of £50m crackdown on abused gift relief rules
The government has unveiled details of its crackdown on business assets gift relief, which it claims has been widely used as a method of tax avoidance.
The Inland Revenue announced on November 9 last year that it was ending business assets gifts relief on the transfer of shares or securities to companies.
It said that people were abusing the system, designed to prevent erosion of businesses handed down within a family, costing the tax payer £50m a year.
The Revenue has now published the draft clause to be included in this year’s Finance Bill implementing the Chancellor’s announcement. This will enable tax payers to see the precise scope of the proposed new measure.
It is shown below:
DRAFT CLAUSE
Capital gains tax: relief for gifts
(1) In subsection (1) of section 165 of the Taxation of Chargeable Gains Act 1992 (relief for gifts of business assets), for “sections 166 and 167” there shall be substituted “sections 166, 167 and 169”.
(2) In subsection (2)(b)(i) of that section, for “neither listed on a recognised stock exchange nor dealt in on the Unlisted Securities Market” there shall be substituted “not listed on a recognised stock exchange”.
(3) In subsection (3)(b) of that section, after “shares or securities,” there shall be inserted “the transferee is a company or”.
(4) In section 260(1) of that Act (gifts on which inheritance tax is chargeable etc.), for “section 261” there shall be substituted “sections 169 and 261”.
(5) In paragraph 2(2)(b)(i) of Schedule 7 to that Act (relief for gifts of business assets), for “neither listed on a recognised stock exchange nor dealt in on the Unlisted Securities Market” there shall be substituted “not listed on a recognised stock exchange”.
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(6) This section has effect in relation to disposals made on or after 9th November 1999.
Inland Revenue announces crackdown on capital gains tax avoidance