Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
, see all updates

2006 IHT changes: IHT treatment from 22 March 2006: CGT holdover relief from 6 April 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 trusts or individuals cannot qualify (TCGA92/S166).

Relief is available for transfers to a settlement

  • where the asset is a business asset, or shares in an unlisted trading company or parent of a trading group (TCGA92/S165), extended to agricultural land by paragraphs 1 and 3 of Schedule 7,
  • where the transfer is a chargeable transfer for IHT and not a PET (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 hasan interest cannot qualify (TCGA92/S169B) unless it is a trust for a disabled person or aheritage maintenance fund. See TCGA92/S169D. Under FA2006 the definition of settlorinterest was extended from 6 April 2006 to cases where a minor child of the settlor(including any step- child, but excluding any child married or in a civil partnership) canor does benefit. Only existing minor children as opposed to possible minor children aretaken into account.

A Potentially Exempt Transfer which becomes a chargeable transfer because the donor hasdied within seven years of the gift does not qualify.

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 is a business asset or shares in an unlisted trading company or parent of a trading group (TCGA92/S165), extended to agricultural land by paragraphs 1 and 3 of Schedule 7,
  • 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 note the restrictions in, CG36544) including the case where the principal beneficiary dies (TCGA92/S260 (2)(d),
  • where IHTA84/S71B(2),CG36544, provides that there is no chargeable transfer, (basically absolute entitlement of or death of bereaved minor) (TCGA92/S260 (2)(da)),
  • where IHTA84/S71E(2), CG36544, provides that there is no chargeable transfer (absolute entitlement or death of beneficiary of 18-25 trust at 18 or under) (TCGA92/S260 (2)(db)), and
  • in certain rare cases of IHT exemptions (TCGA92/S260 (2)(b)(c)(e)(f)), which are not further considered here.