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HMRC internal manual

Capital Gains Manual

Gifts to employee trusts: introduction


TCGA92/S239 provides relief from Capital Gains Tax if an individual or close company transfers an asset to certain employee trusts that qualify for favourable Inheritance Tax treatment.

The gain is either reduced or calculated on a no gain/no loss basis. Section 239 applies automatically where the conditions are met. It is not a relief that has to be claimed. It therefore applies in priority to gifts hold-over relief because it affects the basic computation.

The relief applies both to outright gifts and to transfers at below market value. The normal Capital Gains Tax rules apply to disposals in which the trustees give consideration which is greater than the costs allowable to the transferor under TCGA92/S38.