Article Abstract:
Proprietors of family companies in the UK can realize substantial relief from the capital gains tax from retirement relief. Planning is essential for retirement relief as it may be denied on technicalities: 10 years before retirement is the proper threshold for planning. Shareholders with an equity interest in family-held companies typically can gain retirement relief if they dispose of their shares in the company upon reaching the age of 60 or older, or earlier if they must retire due to ill health. The taxpayer seeking retirement relief must be a full-time working director of the company, and the taxpayer's company must be a family company. For a company to be considered a family company, the taxpayer must have a minimum 25% stake of the voting rights or more than 50% if jointly held by the taxpayer and family members, of which at least 5% must be in the taxpayers' own possession.
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Article Abstract:
The UK Finance Act of 1989 has limited the deferring of the capital gains tax (CGT) levied on gifts by abolishing the general hold-over relief of CGT levied on gifts. However, careful tax planning can allow taxpayers relief since the Act extended the scope of the S 126 gift relief for business assets to gifts of assets to trustees and individuals. In order to qualify for relief, transactions must meet basic relief conditions, including: the transaction must be one where trustees or individuals are disposing of a qualified business asset; the transaction must be other than by way of a bargain at arm's length; and the transfer must be to a recipient who is an ordinary resident of and resident in the UK.
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Article Abstract:
An analysis of the reforms that were prompted by the Finance Act of 1988 are discussed. Specific focus is given to the rebasing rules and their effect on capital gains tax.
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