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HMRC internal manual

Capital Gains Manual

Reliefs: Capital Gains Tax and Gifts: Chargeable Gifts: Liability Paid in Instalments

Introduction

Instalments

{#}Introduction

An election under TCGA92/S281 may be made to have any Capital Gains Tax liability due on a gift paid by ten equal yearly instalments where:

  • assets are disposed of by way of gift or there is a deemed disposal under TCGA92/S71 (1) or TCGA92/S72 (1), see CG37000 and CG36450 respectively

and

  • hold-over relief is not available in full, or where relief was available but has been clawed back in circumstances where, at the point in which the clawback became applicable (see CG66888), no part of the gift had been disposed of by any person for valuable consideration after the gift had been made

and

  • the gift is of:

 

  • land

or

  • a controlling holding of shares and securities

or

  • any holding of shares and securities not listed on a recognised stock exchange (see CG50250). Shares traded on the Alternative Investment Market (AIM) do not fall within this definition, see CG50255.

and

  • an election is made by the person paying the tax by a notice in writing to an officer of the Board). An election may be made at any time before the tax becomes payable.

 

{#}Instalments

If a valid election is made then the tax is paid by ten equal yearly instalments, the first of which is due on the day the tax would otherwise have been payable, subject to the following:

  • Interest will run from the normal due date and interest on the unpaid portion of the tax will be added to each instalment.
  • The outstanding tax can be repaid at any time with interest to the date of payment.
  • The outstanding tax with interest to the date of payment is to become due and payable immediately where assets

 

  • which were given to a connected person

or

  • which were treated as disposed of by trustees

are subsequently sold for valuable consideration, whether or not by the recipient of the gift which instalments are being paid in respect of.

  • If the outstanding tax arises in respect of a chargeable gain which accrued on account of a clawback of relief under TCGA92/S169C (see CG66888 for hold-over relief under TCGA92/S165 for gifts of business assets, and CG67032 for hold-over relief under TCGA92/S260 for gifts of non-business assets), the outstanding tax with interest to the date of payment will become due and payable immediately where any part of the assets transferred in the original gift are subsequently disposed of for valuable consideration

 

  • by the trustees to whom the relevant disposal was made

or

  • some other person.