Who is a connected person for capital gains tax (CGT) purposes?
Why does this matter?
- This is a quick guide: summarising who is connected with who for CGT purposes.
- The basic rule in S18 TCGA 1992 is that a gift made at an undervalue between connected persons is treated as being made at market value.
An individual is connected with:
- His spouse or civil partner.
- His relative.
- The spouse or civil partner of his relative.
- The spouse of civil partner of his spouse or civil partner’s relative.
Relative = brother, sister or, lineal descendents
An individual is also connected to:
- His business partner (unless the transaction relates to the disposal of partnership assets under bona fide commercial terms).
- The spouse or civil partner, or any relative to his business partner.
A trustee is connected with
- The settlor
- Any individual connected with the settlor
- An person connected with the that settlement
A company is connected with another company if:
- Under common control.
- One person has control of one company and persons connected with him have control of another company.
- Any 2 or more persons acting together to secure or exercise control of a company shall be treated, in relation to that company, as connected to one another and with any person acting on the directions of any of them to secure or exercise control of the company.
A company is connected with another person if that person has control of it or if that person and persons connected with him have control of it.
Small print
S286 TCGA 1992
It is recommended that you always refer back to the detail of the legislation when considering connected persons.
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