CGT entrepreneurs’ relief – an intriguing anomaly

In the August/September issue of Trusts and Estates, in response to a reader’s query, the Editor discussed the restriction on the availability of the 10% CGT tax rate where, for example, an asset is owned by one of the members of a partnership, who is paid a rent, by the partnership for the use of that asset. The discussion centred upon the possibly unintended consequence of the drafting of s169P (4) (d) TCGA 1992 and para 65 of the Finance Act 2008, which could be construed in such a way that a payment of rent, after 5 April 2008, would have the unintended effect of restricting the relief for the whole gain arising on the disposal of an asset which had been acquired before 6 April 2008. This was certainly understood to not have been intended. The legislation inserted at the report stage of the Finance Bill was understood to have been intended to address the unfairness of applying the restriction, to a gain that accrued prior to 6 April 2008, which could have enjoyed an unrestricted 10% rate of tax under taper relief.