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ARTICLE · 02 NOVEMBER 2004

Tax On Pre Owned Assets

Jones Day
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Under the Finance Act 2004 a new income tax charge ("the Tax") has been introduced which will apply wherever a person enjoys a benefit from assets which they either formerly owned, or provided the funds to purchase, but which they no longer own.

United KingdomTax
Jennet Davies
Jennet Davies
Sarah Challinor
Sarah Challinor
Lucy Johnson
Lucy Johnson
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A new income tax charge which may affect anyone enjoying a benefit from assets they have given away

Under the Finance Act 2004 a new income tax charge ("the Tax") has been introduced which will apply wherever a person enjoys a benefit from assets which they either formerly owned, or provided the funds to purchase, but which they no longer own.

The Tax is intended to penalise those who enter or have entered into arrangements which save inheritance tax by giving away assets, but under which the giver continues to use or enjoy the assets. The person who gave/provided the assets is referred to below as "the taxpayer".

The Tax applies where:

  • in the case of land, the taxpayer occupies the land and either once owned it but gave it, or an interest in it, away; or gave another person the funds to buy it or an interest in it; or owned other property which was sold and the proceeds used by another person, directly or indirectly, to buy the land; or

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