CG38640 - Capital payments - valuation of benefits and non-cash payments

TCGA92/S97(4)

Unless the capital payment is a payment of money it will have to be valued. Section 97(4) provides the amount of a capital payment by way of loan or anything other than the outright payment of money is equal to the value of the benefit conferred.

If the payment is the transfer of trust property the value will be the market value of the asset. If the payment is the conferring of a benefit the value will be the value of a similar benefit received from an unconnected third party.

The most common benefits giving rise to capital payments are:

• interest free or low interest loans, CG38645
• rent free or low rent occupation of property,CG38660.
• Schedule 14 Finance (No2) Act 2017 introduced sections 97A to 97C TCGA 1992 to value certain capital payments. These rules apply for the purposes of section 87 TCGA 1992, the Transfer of Assets Abroad provisions in sections 742B to 742E ITA 2007 and for the purposes of calculating a benefit whose value is treated as income of the settlor, or a close family member, under the settlements benefit legislation charge.