Life interests: extension to non-life interests: example
Three assets are put into trust in May 1989. Each was worth £50,000 and was subject to a hold-over claim on a gain of £40,000. The beneficiary B had an interest in possession which was not a life interest in the entire settled property.
In 1993 B dies and the assets on that date were each worth £110,000. On B’s death C became absolutely entitled to Asset 1, and D had a life interest in possession in Assets 2 & 3.
Later in 1993 Asset 2 was sold for £140,000.In 1994 D died and X became absolutely entitled to Asset 3, then worth £200,000.
The indexation factor is 0.250 for all disposals
|The indexation factor is 0.250 for all disposals|
|Deemed Disposal Proceeds||110000|
|less||Cost||Market Value (1989)||50000|
Concession allows use of 1993 value but reduces it by the amount of the held-over gain.
|less||Market Value (on death of B)||110000|
|less||Indexation||70,000 x .250||17500|
Sections 73 and 74 apply in the normal way without any concession. The chargeable gain is equal to the held-over gain of £40,000.
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 CG17207+ and for taper relief see CG17895+.