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HMRC internal manual

Capital Gains Manual

Gifts: Inheritance Tax: gifts to settlor-interested settlements: transferee becomes settlor-interested settlement before hold-over relief is obtained

Subject to certain exceptions, a claim for hold-over relief under TCGA92/S260 in relation to a “relevant disposal” (see CG67068C) which is made after the “material time” (see CG67068C) is not a valid claim if the relevant disposal is to the trustees of a settlement where, within the “clawback period” (see CG67068C)

  • the settlement becomes a “settlor-interested settlement” (see CG67068A), or
  • an “arrangement” (see CG67068A) comes into existence under which the settlement will or may become a “settlor-interested settlement”.

[TCGA92/S169C (1), (2) and (4)]

The exceptions to this general rule are explained in CG67071.

The extension of the definition of “interest in settlement” to include dependent children, see CG67068A, applies only to disposals made on or after 6 April 2006 for the purposes of TCGA92/S169C.