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The definition of a connected person for tax purposes can be complex.
A statutory definition of “connected persons” for Capital Gains Tax purposes is set out in Section 286 of the Taxation of Chargeable Gains Act (TCGA) 1992.
The legislation states:
" A person is connected with an individual if that person is the individual’s spouse or civil partner, or is a relative, or the spouse or civil partner of a relative, of the individual or of the individual’s spouse or civil partner"
In this context, "‘relative’ means brother, sister, ancestor or lineal descendant and spouses or civil partners of relatives. The term 'relative' does not cover all family relationships. In particular, it does not include nephews, nieces, uncles and aunts.
HMRC’s internal guidance on this definition also states that: