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HMRC internal manual

Capital Gains Manual

Gifts: introduction

What is a gift?

Strictly the word `gift’ should only be used to describe a transfer from one person to another for no consideration at all, including gifts in settlement to trustees, see CG35700. However, because most of the Capital Gains Tax reliefs for gifts also apply to disposals at less than market value, in this section of the instructions the word `gift’, unless it is clear from the context, is used to refer to any transaction other than a bargain at arm’s length. The date of a sale below market value is the date of the contract. The date of an outright gift is the date upon which the gift became effective. See CG14260.

Disposals by trustees

These instructions also apply to deemed disposals by trustees where beneficiaries become absolutely entitled to assets, see TCGA92/S71 (1) and CG37000.

Market value

Because a gift is not a bargain at arm’s length, under TCGA92/S17 the person making the gift is treated as disposing of the asset at market value, unless it is a situation where one of the special reliefs applies which are described in CG66620 (gifts to charities or museums etc.), CG36000 (gifts to employee trusts), CG66635 (gifts to housing associations) and CG73300 (gifts of heritage).

CG16330+ tells you about market value.

CG14540 tells you about bargains which are not at arms’ length.

The person acquiring the gift is treated as acquiring the asset at its market value at the time of disposal, if none of the relieving provisions apply. Otherwise the cost is reduced according to the particular terms of the relieving provision.

Where to find help

If you need help about

  • the time of disposal of an asset for Capital Gains Tax purposes, see CG14260
  • gifts of copyright and the procedures to be followed in Districts, see BIM50745
  • gifts of certain important works of art, scientific collections, etc and of assets given in connection with the preservation of historic houses or of land for the public benefit, see CG73300+
  • reports to Specialist PT - IHT (formerly CAR - IHT and before that the Capital Taxes Office) in cases involving substantial gifts, see:

    • TM3541 for trust related gifts
    • AP4068 for other gifts.


The most common form of relief which is available in cases involving gifts is hold-over relief. This defers the chargeable gain on the disposal by the donor until the asset is disposed of by the donee. See CG66880+ for guidance on gifts of business assets and CG67030+ for guidance on gifts on which Inheritance Tax is chargeable. See CG66730+ for guidance on any gift made before 14 March 1989.

Finance Act 2004 introduced restrictions on hold-over relief on gifts to settlements in which the settlor has or acquires an interest. See CG67064 for guidance if the gift is chargeable to Inheritance Tax.

No gain/no loss transfers

Gifts to certain bodies are treated as made on a no gain/no loss basis. These are gifts to the following:

  • charities (see CG66620+)
  • museums and other national or local institutions (see CG66620+)
  • housing associations (see CG66635+)
  • employee trusts (see final paragraph of CG36000+).

If the transfer is an outright gift or for a consideration less than the allowable expenditure within Section 38 TCGA, it is treated as a transaction producing neither gain nor loss. For other disposals only the actual consideration is taken into account.

Gifts back

If you have a case where an asset which has been gifted is subsequently returned by the donee to the donor, you should deal with it on the basis that there have been two disposals:

  • one by the original donor to the original donee


  • one in the opposite direction.