CG34393 - Bare trusts: examples: land owned by several people at once
Exceptionally there may be a bare trust of land in a situation where the rights of the persons concerned are not of exactly the same kind. For instance land which is wholly owned by Mr A may be conveyed to trustees on the basis that Mr A is entitled to the first £100,000 of the sale proceeds, and his children X and Y are each entitled to half of the rest. (This is not a tenancy in common.) Essentially it is no different from a conventional trust where on the occurrence of a particular contingency Mr A gets a lump sum and X and Y get the rest.
Suppose the land cost £150,000, and, at the date of the conveyance to the trustees, Mr A's residual interest is worth £75,000, and the value of the interests taken by X and Y is £125,000 each. A has made a part- disposal, see CG12730+ and the computation is:
£ | |||||
Disposal Proceeds | 250,000 | ||||
less | Cost | 150,000 | |||
Proportion | |||||
Allowable | 250,000 | x | 150,000 | 115,385 | |
(250,000+75,000) | |||||
Gain | 134,615 |
NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. For indexation allowance see CG17200C and for taper relief see CG17895.