CGT

What if I dispose of assets I own jointly?

Each of you is usually liable to tax on your half of any gain arising, assuming the asset is owned equally. If it is not, you are each assessed to tax based on your share of the asset.

What is the date of disposal?

The date of disposal for CGT is the date that you enter into an unconditional contract.

This means that for property, this is the date that contracts are exchanged and not the date of completion when possession of the property is actually taken.

However, note that the 60-day (or 30-day) window for reporting any capital gains tax due on disposals of UK residential property (or, if you are non-resident, for reporting all disposals of UK land or property) begins from the date of completion.

For shares, it is the date the bargain actually took place and not the date of the contract note or the date of settlement.

If, instead, you enter a conditional contract, the relevant date is the date when the conditions are satisfied. Let’s say, for example, someone agreed to buy a house that you own on the condition that the broken-down central heating boiler is replaced. The terms of that work might be set out in an agreed contract. The disposal date for the house for CGT purposes would be when the work was agreed to have been completed to the terms of the contract, not the date the contract was agreed.

What if I get some sale proceeds at a later date?

When you sell an asset, sometimes you receive only part of the money at the date of sale. You may receive further amounts later and some may be dependent on future events. This is called deferred consideration.

Depending on the type of deferred consideration involved, you may need to take it into account immediately when working out your gain or loss for the disposal even though you do not receive it until sometime later.

Generally, if you know the amount of money that you will be receiving, even if it is not payable until a later time, then you include it when calculating the gain or loss.

For example, if the deferred amount consists of an immediate payment followed by a number of instalments, the figure of total proceeds is known in the year of disposal and should be included in your CGT computation even though the actual money will not be received until later.

Where the disposal proceeds for an asset are payable to you by instalments, you may, in certain circumstances, ask HMRC if you can pay any CGT due by instalments (in recognition that you may not have the money to pay the CGT otherwise).

This relief is available where the installments, as set out in the contract for sale of the asset:

• begin no earlier than the date of disposal of the asset; and
• extend over a period exceeding 18 months; and
• continue beyond the date on which the tax would otherwise be due and payable.

HMRC guidance states that such an application must be made in writing to them.