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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Gifts: Inheritance Tax: gifts to settlor-interested settlements: relevant individual has interest in settlement immediately after disposal: intermediate gifts

Subject to certain exceptions, hold-over relief under TCGA92/S260 is unavailable where the “relevant disposal” (see CG67068C) is to the trustees of a settlement where

  • in computing the amount of the held-over gain in respect of the “relevant disposal” (assuming that no gifts hold-over relief is available on that disposal), the amount of expenditure allowed as a deduction would need to be reduced on account of gifts hold-over relief obtained under TCGA92/S165 or TCGA92/S260 in respect of an earlier disposal (whenever made) by an individual (the “relevant individual”),


  • immediately after the “relevant disposal”, the relevant individual has an “interest in the settlement” (see CG67068A), or there is an “arrangement” (see CG67068A) in existence under which he or she will or may acquire an interest in the settlement.

[TCGA92/S169B (1) and (3)]

The exceptions to this general rule are explained in CG67071.

Note that the “relevant individual” need not have any connection whatsoever to the person who made the “relevant disposal”.

The reason for this rule is to prevent the restriction described in CG67065 being avoiding by transferring the asset first to another individual or trustees of a non settlor-interested settlement and getting them to make the gift into the settlor-interested settlement.