Deemed market value

This worked example is for illustrative purposes only.

Example:

A transfers a residential property to company B, for consideration of £170,000.

Chargeable consideration and tax payable where A is not connected with company B

A is not connected with company B in accordance with section 1122 of the Corporation Tax Act 2010. The chargeable consideration is the amount paid, in this case £170,000. The total tax payable is £500 using the current residential rates and bands.

Chargeable consideration and tax payable where A is connected with company B

A is connected with company B in accordance with section 1122 of the Corporation Tax Act 2010. Therefore it is important to know the market value of the property.

If the market value was £275,000 this would be the amount of the chargeable consideration as it is higher than the amount paid (£170,000). Based on a chargeable consideration value of £275,000, the total tax payable is £3350 using the current residential rates and bands.

If, however, the market value was £150,000, the chargeable consideration would be £170,000 as it is higher than the market value. Based on a chargeable consideration value of £170,000, the total tax payable is £500 using the current residential rates and bands.