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Extra Statutory Concession ESC D26 and Capital Gains Tax Liability - tax and financial advice from independent financial adviser (IFA) Isis Financial Planners

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Isis Financial Planners' Maggie Fleming answers reader's questions in Saturday's Daily Telegraph newspaper for the Property Clinic section.

There is a wealth of information on all aspects of property and tax from Capital Gains Tax and Inheritance Tax to other technical and challenging issues of this complex subject. This page shows the articles for October 2009. To browse the articles from a previous year, please visit the main Property and Tax page of this website.

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  • Extra Statutory Concession (ESC) D26 & Capital Gains Tax (CGT) Liability - 6 October 2009
    • Many years ago, my brother and I were jointly left two adjacent flats, which have always been let out. Now we'd like to arrange matters so that each of us owns one, but are concerned about incurring a huge CGT liability on transferring our interests. If we granted 999-year leases over one property to each of us, would this solve our problem?
    Maggie Fleming writes:

No. There could be legal difficulties and, in any case, the grant of a long lease is a part-disposal for capital gains tax purposes. Relevant here is HMRC's ESC (Extra Statutory Concession) D26, which applies to the context of a brother and sister jointly owning two properties, each of which was their main residence, and each wishing to end up owning their own home.

ESC D26 also applies to land and buildings that are not used as the owners' main residences. You could use this to exchange your interests in the properties without incurring an immediate charge to CGT. Each gain would be deferred until the property was sold.

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