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HMRC internal manual

Capital Gains Manual

Gifts in settlement: sales involving trustees


The wording of Section 70 was amended in 1981 to make it clear that any transfer of assets into settlement on or after that date is a disposal. The old wording used the words `gift in settlement’. Clearly a sale is not a gift. This was considered in Berry v Warnett, 55TC92. As an avoidance scheme the taxpayer transferred assets to trustees, reserving a life interest for himself. The reversionary interest was assigned to a Jersey company for market value. The House of Lords considered that the argument that it was not a gift was irrelevant, because there was a disposal of the entirety of the assets and not a part disposal.

TCGA92/S17 (as introduced by FA81/S90), provides that the consideration for such a gift or transfer is the market value.