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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Capital Gains Tax: interaction with Inheritance Tax

TCGA92/S274

Up to 30 March 1971, inclusive, Capital Gains Tax imposed a charge on the occasion of death but the Capital Gains Tax was deducted in arriving at the estate duty payable. The Capital Gains Tax value of an asset was (with one exception) conclusive of its value for Estate Duty purposes. On or after 31 March 1971 death is no longer an occasion of charge for Capital Gains Tax purposes. Furthermore, the valuation rules have been reversed so that the Estate Duty, Capital Transfer Tax or Inheritance Tax agreed valuation of an asset is conclusive, in all cases, of the value for Capital Gains Tax purposes as at the date of death.

For guidance on the rule at TCGA92/S274 see CG32210+.

TCGA92/S258

The existence of a possible charge to Inheritance Tax does not affect the computation of the chargeable gain or allowable loss, except where relief is available under TCGA92/S258 in connection with

  • works of art
  • historic houses and associated assets
  • preservation of land for public benefit.

For guidance on TCGA92/S258 and National Heritage matters see CG73300+.

TCGA92/S260

Gifts hold-over relief may be claimed under TCGA92/S260 (2)(a) if Inheritance Tax is charged on the gift. Hold-over relief may also be claimed in certain other circumstances listed in Section 260(2) where there is no Inheritance Tax charged because of some relief or exemption.

Where a claim for hold-over relief has been or could have been made, the Inheritance Tax charged on that occasion (or, if less, the amount of the chargeable gain disregarding the adjustment for the amount held-over or which could have been held over) can be claimed as a deduction in the computation of the chargeable gain on the subsequent disposal. (See CG67050).

For guidance on gifts hold-over relief see CG67030+.

Queries on Inheritance Tax matters

Any enquiries about Inheritance Tax should be referred to Specialist PT Inheritance Tax.