Briefing

CGT entrepreneurs’ and other reliefs

In general, the capital gains tax (CGT) system seems to treat trustees more harshly than it treats individuals. Most obviously, all the trustees’ chargeable gains (less an annual exemption which is only half that enjoyed by individuals) are taxed at the rate of 28%, which no possibility of gains within a basic rate band being taxed at 18%. Such reliefs as are made available to trustees are often subject to conditions which are more onerous than those applied to individuals, especially where a business is being carried on. In some cases this maybe a natural and inevitable consequence of the trustees being a separate body of persons, distinct from the individual trustees and beneficiaries. Sometimes, however, reliefs may be given by reference to the circumstances of a beneficiary, particularly one who enjoys an interest in possession and who would have been entitled to the relief if, he had owned the asset being disposed of in his own right. The issues can arise particularly sharply where an asset (typically land) is held in trust but used by the life tenant for the purposes of a business.