Taxation of Chargeable Gains Act 1992 section 239ZA

Relief for disposals by trustees of employee trusts

Section 239ZA prevents a double tax charge arising when trustees of an employee trust transfer assets to beneficiaries by exempting the disposal from capital gains tax where the value is already subject to income tax as employment income.

• Gains on disposals by employee trust trustees to beneficiaries are exempt from CGT provided the asset's market value is charged to income tax as employment income and no actual consideration is paid to the trustees
• The relief does not apply if the beneficiary or the person liable for income tax is an "excluded person" — broadly, a significant participator (5% or more) in the company whose shares are held in the trust, or in a close company that provided property to the trust, or anyone connected with such a participator
• The definition of "connected persons" is extended beyond the normal CGT rules to include uncles, aunts, nephews and nieces, and a person can be treated as a participator even in a company that is not technically a close company
• The relief, which applies to disposals on or after 6 April 2009, replaced the former extra-statutory concession D35 and ensures that the same economic value is not taxed under both income tax and capital gains tax