Chapter 33 – Structures and Elements

33.3 Rates of Tax. At Spring Budget 2024, the Chancellor announced that the top rate
of CGT applied to residential property would be reduced from 28% to 24%, with
effect from 6 April 2024. This was implemented in Finance (No 2) Act 2024 s 6.

33.4 Annual Exempt Amount. The annual capital gains exemption for individuals
for 2024-25 and subsequent tax years is £3,000.

33.11.3 Separation. The Finance (No 2) Act 2023 introduced some new statutory
CGT relief rules in respect of separation. Most notably, spouses and civil partners in
the process of separating and no longer living together have up to three full tax years
in which to transfer assets between themselves for neither a gain nor a loss after they
cease to live together, or until the date of divorce/annulment/dissolution, whichever is
earlier. Favourable tax treatment will also apply to deferred payments on disposals of
a dwelling house or part thereof under a deferred sales agreement or order in
connection with divorce etc.

Chapter 34 – Assets

34.6.2 Furnished Holiday Lettings. At Spring Budget 2024 the Chancellor
announced an intention to abolish the FHL tax regime with effect from 6 April 2025.
However, the changes did not make it into Finance (No 2) Act 2024 and any reforms
will be in the hands of the next government.

34.7.3 Periods When Not Used as the Main Residence. In HMRC v G Lee and
another [2023] UKUT 242 (TCC), the Upper Tribunal decided that ‘period of
ownership’ of a dwelling-house meant the period during which the relevant house was
in existence, and did not include the time the land was owned before the house was
built on the land.

Chapter 35 – Disposals: (1) General

35.2.1 Disposal Under Contract: When the Contract is Made. Special rules apply
to the operation of the period in which a person must notify HMRC that they are
chargeable to capital gains tax or corporation tax, and the time limits for assessing
chargeable gains and claiming allowable losses, where an asset is disposed of under
an unconditional contract: see the TCGA 1992 s 28A (added by the Finance (No 2)
Act 2023).

Chapter 39 – Death

39.6.1.2 Annual Exemption. The annual capital gains exemption for personal
representatives is £3,000 for 2024-25 and subsequent tax years. Note also that the
amount in the textbook for 2021-22 is incorrect and should instead read £12,300.

Chapter 40 – Trusts

40.1.2.1 Annual Exempt Amount. The annual capital gains exemption for trustees
for 2024-25 is £1,500 (one-half of the usual CGT exempt amount). The full individual
amount that applies to trusts for certain types of disability is £3,000. These amounts
apply for 2024-25 and subsequent tax years. Note also that the amounts in the
textbook for 2021-22 are incorrect and should instead read the usual was one-half of
£12,300 or £6,150, with the full £12,300 for trusts for certain types of disability. In
2021-22, if there were two trusts, each trust would have £3,075 and if there were 12
settlements each would have an exemption of the minimum of £1,230.

Chapter 41— Shares, Securities and Other Fungible Assets

41.5.3 Anti-avoidance. In HMRC v Delinian Ltd (formerly Euromoney Institutional
Investment plc) [2023] EWCA Civ 1281, the Court of Appeal restored the First-tier
Tribunal’s conclusion that the ‘scheme or arrangements’ of which the share exchange
formed part was the whole scheme or arrangements and not just the part related to the
preference shares, and that obtaining a tax advantage was not a main purpose of the
overall deal. In O Wilkinson and others v HMRC [2023] UKFTT 695 (TC), the

First-tier Tribunal held that a share for share exchange did not form part of a scheme or
arrangement of which the main purpose, or one of the main purposes, was the
avoidance of a liability to CGT.

Chapter 42 – Capital Gains Tax and Business

42.5 Business Asset Disposal Relief (formerly Entrepreneurs’ Relief). Trustees
were entitled to entrepreneurs’ relief because the beneficiaries had been qualifying
beneficiaries of the trusts at the time of disposal (and the legislation did not require
that condition be satisfied throughout the then one-year qualifying period as HMRC
has contended): see The Quentin Skinner 2015 Settlement L and others v HMRC
[2022] EWCA Civ 1222. In Trustees of the Peter Buckley Settlement v HMRC [2024]
UKFTT 29 (TC), the First-tier Tribunal concluded that a trust can obtain relief on a
disposal of a qualifying asset provided that (broadly) a beneficiary also qualifies for
relief in his or her own right (but this was not satisfied in the Buckley case).

Chapter 43 – Computation of Gains

43.2.1 Seven Categories of Allowable Expenditure: Rule (4): improvement
expenditure. The cost of repaying a loan made to a company increased the value of
the shares but was not ‘on’ the shares, nor was it reflected in their state or nature: see I
Tedesco v HMRC [2022] UKFTT 171 (TC). This decision is in keeping with the rather
strict interpretation of these words in the Blackwell case. Legal expenditure incurred
in defending rights to the sale proceeds from two parcels of land was not an allowable
deduction in computing the gain on one of the parcels as the expenditure was not
incurred ‘wholly and exclusively’ for that parcel and there is no provision for
apportionment: see J M Slade and another v HMRC [2022] UKFTT 227 (TC). The
strict interpretation of TCGA 1992 s 38 continues in Bottomer v HMRC [2023]
UKFTT 893, where a sum representing 50% of the gain on the transaction paid to a
third party who had introduced the taxpayers to the opportunity and subsequently
performed some oversight did not qualify as ‘incidental costs’ of the acquisition or
disposal, or as ‘expenditure wholly and exclusively incurred on the asset’ by the
taxpayers ‘for the purpose of enhancing the value of the asset, being expenditure
reflected in the state or nature of the asset at the time of the disposal’, with the result
that no relief was given for the sum in computing the gain.