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HMRC internal manual

Capital Gains Manual

TCGA92/Sch4B - transfer of value


The trustees make a transfer of value if they:

  • lend money or any other asset to any person, paragraph 2(1)(a)
  • transfer an asset including sterling to any other person either for no consideration or for a consideration less than the market value of the asset, paragraph 2(1)(b)
  • issue a security to any person and receive either no consideration or consideration less than the value of the security, paragraph 2(1)(c).

Paragraph 2(1)(a)

In general law an ordinary deposit of funds into a bank account is treated as a loan by the customer to the bank. This is not treated as lending money for the purposes of paragraph 2(1)(a).

A loan for full consideration, ie at a market rate of interest, is still a transfer of value.

A beneficiary may occupy trust property rent-free. Whether that is treated as the loan of an asset by the trustees depends on the terms of the trust. If section 12 Trusts of Land and Appointment of Trustees Act 1996 gives the beneficiary a personal right of occupation that is not treated as the lending of an asset. If the occupation is because the trustees have exercised a power of appointment or advancement that may be the lending of an asset.

Paragraph 2(1)(b)

A ‘transfer of value’ within paragraph 2 is concerned with capital transactions. If the trustees of a discretionary settlement make a distribution which is income of the recipient for UK tax purposes that is not the transfer of an asset. The sale of an asset for full consideration either to an unconnected third party or to a beneficiary is not the transfer of an asset.

‘Transfer of an asset’ includes any disposal or anything that the TCGA treats as a disposal, TCGA92/Sch4B/para13(2). Therefore a transfer of value will include the occasion when a beneficiary becomes absolutely entitled to trust property as against the trustees, TCGA92/S60. There is no requirement that the disposal would give rise to a chargeable gain. As well as a disposal of sterling a transfer of value will include a disposal of gilts or qualifying corporate bonds.

This is of particular relevance for the operation of TCGA92/Sch4C which apply even if a Schedule 4B gain does not accrue on the transfer of value, CG39260.

See CG39120 if a part disposal creates a new asset.

Paragraph 2(1)(c)

This paragraph covers the exceptional case in which the trustees issue a document to a beneficiary or trustees of another settlement acknowledging a liability. This is not in itself the disposal or part disposal of an asset and has to be covered by an express rule.