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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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2006 IHT changes: CGT gifts hold-over treatment before 22 March 2006

This paragraph is only a summary and in considering whether gifts hold-over relief(CG66880) is available the relevant guidance and/or the legislation should be consulted.Transfers to non-resident trustees or individuals cannot qualify (TCGA92/S166).

Relief may be claimed for transfers to a settlement

  • where the asset was in use for the purposes of certain trades or professions, extended to agricultural land by paragraphs 1 and 3 of Schedule 7or shares in an unlisted trading company or parent of a trading group (TCGA92/S165), and including the case of a personal company that is listed,
  • where the transfer was a chargeable transfer for IHT and not a Potentially Exempt Transfer (TCGA92/S260 (2)(a),
  • in certain rare cases of IHT exemptions (TCGA92/S260 (2)(b)(c)(e)(f)). These are not further considered here.

However transfers to settlements where any settlor or his spouse or civil partner hadan interest could not qualify for the relief where the disposals were made after 9December 2003 (TCGA92/S169B) unless it was a trust for a disabled person or a heritagemaintenance fund. See TCGA92/S169D.

A PET which becomes a chargeable transfer because the donor has died within seven years ofthe gift does not qualify under S260 (2)(a).

It is available in one situation on the death of a person with an interest in possession:

  • Where section 74 (CG36510) applies, provided that it is a chargeable transfer for IHT.

Relief is available on transfers out of a trust, whether to an individual or to thetrustees of another settlement

  • where the asset was in use for the purposes of certain trades or professions, extended to agricultural land by paragraphs 1 and 3 of Schedule 7 or shares in an unlisted trading company or parent of a trading group (TCGA92/S165),
  • where the transfer is a chargeable transfer for IHT (TCGA92/S260 (2)(a),
  • when a person becomes absolutely entitled as against the trustees of an accumulation and maintenance settlement (but not one which has lost this status) including the case where the principal beneficiary dies (TCGA92/S260 (2)(d), and
  • in certain rare cases of IHT exemptions (TCGA92/S260 (2)(b)(c)(e)(f)), which are not further considered here.