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HMRC internal manual

Capital Gains Manual

Annual exempt amount: exploitation

Taxpayers can arrange their affairs in such a way that they obtain the benefit of morethan one annual exemption against the gain on a single asset. The two most common methodsof doing this are-

i) FRAGMENTATION: the intention is to increase the number of the disposer’s exemptions by fragmenting the disposal over two or more tax years;
ii) ASSET SPLITTING: the intention is to increase the number of disposers by spreading the ownership of the asset, usually by gifting. A single asset may be split into fractional interests, or a shareholding divided. The donees are typically minor children or other relatives. Transfers from one spouse to another or between civil partners can also achieve the same end.