The Dormant Assets Scheme was established in 2008 by the Dormant Bank and Society Accounts Act.
The purpose of the scheme is to reunite dormant financial assets with their rightful owners. However, if the money can’t be reunited, or the owner found, the money is used for social and environmental initiatives across the UK. This scheme is backed by the UK government. The owner of the money still retains the right to reclaim their lost assets in full at any point.
A dormant asset is any type of financial product that hasn’t been accessed for a number of years, for example a bank account, and the provider hasn’t been able to reunite this product with the owner, following best practice efforts to contact the owner.
To learn more about the Dormant Assets Scheme, and to see if you have any lost assets, follow this link to the Gov website.
New Capital Gains Tax exemption:
The government has announced that they are planning to expand the Dormant Assets Scheme to encompass assets from pensions, insurance, investment and wealth management and security sectors.
Before these dormant assets can be transferred into the scheme, these assets need to be monetised first. A process that would usually incur Capital Gains Tax for the rightful owner of the assets. However, with the owner of the asset not being known or located, plus being unaware of the transfer of their assets into the scheme, it would be inappropriate to charge them CGT on any profits or losses made from their assets. As such, the owner of the assets won’t pay any tax for the transfer.
If, later on, the owner of the assets does go onto reclaim these dormant assets, they will then potentially pay the CGT once they have received the proceeds. If a loss was made on these assets the individual will still be able to notify HMRC for those losses. These changes should make it that the individual remains in the same tax position if the assets hadn’t been moved into the Dormant Assets Scheme.