connected persons

Question 1

connected persons for cgt

Answer 1

• parents, step parents, grandparents, children, children’s spouses
• spouse and spouses parents / siblings
• not cousins aunties and uncles
• company own 50%+ of voting rights
• business partner and their relatives

Question 2

disposals

Answer 2

• disposals deemed at market value
• deemed proceeds become base cost for connected person

Question 3

losses on disposals to connected persons

Answer 3

• if transactions between connected persons give rise to a capital loss:
• loss can only be used against gains on future disposals to the SAME person
• stops people generating deliberate losses to reduce their cgt liability

Question 4

cgt tax planning

Answer 4

• ngnl transfers can ensure aea is not wasted
  *ngnl can also enable bfwd losses to be offset efficiently
• if one spouse is basic rate and the other is higher or additional rate, ngnl can ensure that the basic rate band is not wasted and tax is paid at lower rate