Capital Gains Tax Question

uih039

I have a share-holding in a family business which has recently been sold.

The sale proceeds are payable to shareholders in instalments over 5 years.

For Capital Gains Tax purposes, is tax due in the tax year in which the sale was completed or is it spread over 5 years when proceeds are received?

I would be grateful for advice.

Many thanks.

Andrew.

jimmo

The answer to your question is that the tax is chargeable for the year of the sale. If the proceeds of sale are payable by instalments it is sometimes possible to pay the tax due by instalments but it is not spread evenly over the instalment period. HMRC will expect half of each instalment you receive until the tax is fully paid.
However, it is rarely that simple and if the instalments to be paid to you depend on the company‘s future profitability then you will be subject to the rules on “unascertainable deferred consideration”.
This is the contents page in the HMRC Instructions. http://www.hmrc.gov.uk/manuals/CG1manual/cg14850+.htm

uih039

Thanks for your comments. That has clarified the position for me.