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HMRC internal manual

Capital Gains Manual

Gifts: Inheritance Tax: Relief for Inheritance Tax paid

TCGA92/S260 (7)

Where a claim for hold-over relief has been or could have been made under TCGA92/S260 and Inheritance Tax was paid on the transfer, the transferee can have relief for that tax when he or she disposes of the asset.

Any chargeable gain arising on the disposal is reduced by the lesser of

  • the amount of Inheritance Tax payable


  • the chargeable gain.

Restricting the relief in this way cannot create or augment a loss on the disposal by the transferee.

The relief is mandatory and does not require a claim.

If the transferee makes a part-disposal of the asset you allow the relief against the gain on the part-disposal. If the relief has been limited to the amount of the chargeable gain any balance of Inheritance Tax remaining is available against any subsequent disposal or part-disposal of the remainder of the asset.