Capital gains—intra-group asset transfers


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Tax expert
Practice notes

Capital gains—intra-group asset transfers


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Tax expert

Practice notes
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Companies which form a group for capital gains purposes are able to transfer assets to one another free of corporation tax on chargeable gains.

Each company is a separate legal person for tax purposes meaning that, in the absence of a special rule, an intra-group transfer of a capital asset between companies would be a disposal and would trigger chargeable capital gains (or allowable losses).

Acquisitions and disposals taking place between connected persons (a term which includes companies in the same tax group) are normally treated as taking place otherwise than at arm's length with the result that, without the grouping rules, the consideration for the transaction would be deemed to be equal to the market value of the asset transferred irrespective of any actual consideration paid (see Practice Note: Capital gains for connected persons).

Special provisions are also included in various other areas of tax law (eg in particular, stamp taxes) to ensure that intra-group transfers of assets do not trigger any tax costs.

This Practice Note is about the intra-group transfer rules applying to corporation

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Jurisdiction(s):
United Kingdom
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Key definition:
Connected persons definition
What does Connected persons mean?

Persons connected with a director of a company as defined in CA 2006, ss 252–255, including members of the director's family, a body corporate with which the director is connected, a person acting in their capacity as trustee of a trust (the beneficiaries of which include the director or persons connected with that director), or a person acting in their capacity as partner of the director (or of a person connected with that director). The relevance of connected persons is emphasised in relation to transactions requiring shareholder approval under CA 2006, Pt 10. In relation to listed companies, Chapter 11 of the Listing Rules regulates the conduct of related party transactions between a listed company and its related parties, the definition of which includes any 'associate’ of that party. The definition of associate can be found in the Glossary to the FCA Handbook and has similarities to the definition of connected persons under the CA 2006.

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