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HMRC internal manual

Capital Gains Manual

2006 IHT changes: IHT and CGT treatment from 22 March 2006: transfers from settlements

Transfers from trustees of settlements to individuals other than on termination ofinterest in possession on death:

Type of transferor trust for IHT Chargeable transfer for IHT? Disposal for CGT? Can Holdover Relief be claimed?
Cases subject to qualifying IIP treatment: transferee or spouse or civil partner becomes absolutely entitled No Yes S165 possible
Cases subject to qualifying IIP treatment: other Potentially Exempt Transfer Yes S165 possible
Disabled Trust: transfer to person with deemed IIP or spouse or civil partner No Yes S165 possible
Disabled Trust: transfer to other person Potentially Exempt Transfer Yes S165 possible
Bereaved Minor Trust: transfer to bereaved minor No Yes S260(2)(da)
Bereaved Minor Trust: transfer on death of bereaved minor No Yes S260(2)(da)
Bereaved Minor Trust: other transfer (through statutory power of advancement) Yes Yes S260(2)(a)
A&M Trust (pre 22 March 2006) transfer to relevant beneficiary No Yes S260(2)(d)
A&M Trust (pre 22 March 2006): transfer on death of relevant beneficiary No Yes S260(2)(d)
A&M Trust (pre 22 March 2006): other transfer (through statutory power of advancement) Yes Yes S260(2)(a)
18-25 Trust: transfer to relevant beneficiary when under 18 No Yes S260(2)(db)
18-25 Trust: transfer on death of relevant beneficiary when under 18 No Yes S260(2)(db)
18-25 Trust: transfer to relevant beneficiary when over 18 Yes Yes S260(2)(a)
18-25 Trust: transfer on death of relevant beneficiary when over 18 Yes Yes S260(2)(a)
18-25 Trust: other transfer (through statutory power of advancement) Yes Yes S260(2)(a)
Relevant property Trust: settlor etc interest Yes also gift with reservation depending on assets Yes S260(2)(a)
Relevant Property Trust: no settlor interest Yes Yes S260(2)(a)
Relevant Property Trust: within 90 days of ten year charge No Yes S165 possible

Note that TCGA92/S165 is only available for certain assets.

S165 and S260 do not apply to transfers to most settlements where the settlor or spouse orcivil partner or minor child or minor step-child (unless married or in a civilpartnership) can or do benefit.

For types of trust see CG36541.