Splitting a disposal over more than one tax year to reduce CGT

Splitting a disposal over more than 1 tax year can be very advantageous in reducing capital gains tax as this can then allow another annual exemption to be offset. If an asset is owned jointly between husband and wife this can represent almost an additional £20,000 tax deduction. Therefore for example a single disposal could be split with half sold before 5 April 2009 and the remainder after 6 April 2009. In terms of structuring a split disposal there are no specific provisions that apply. The Revenue would be looking on the facts to determine whether there was a sham arrangement and for any evidence that the total beneficial interest was transferred in the current tax year. Provided though the two disposals are treated as separate and the date of disposal for the second disposal does not occur until after 6 April 2009 it would be difficult for them to argue that they were not made in two separate tax years. Land disposals need to be evidenced in writing and this would therefore prevent them arguing that there was an oral contract in the current tax year. It is clear though that there must be two separate disposals. After the first disposal the second purchase could either be agreed informally to be in the next tax year or they could look to a method of legally committing the purchaser without incurring a disposal in the current year. They could use a put/call option here or could potentially use a conditional contract for the second disposal. If this was dependent on an outside event the Revenue should not be able to argue that the disposal occurred until after the condition was satisfied (which would clearly need to be in the next tax year).