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HMRC internal manual

Capital Gains Manual

Gifts: Inheritance Tax: gifts to settlor-interested settlements: donee becomes settlor-interested settlement after hold-over relief obtained

Subject to certain exceptions, any hold-over relief under TCGA92/S260 obtained in relation to a “relevant disposal” (see CG67068C) must be recovered from the transferor where the relevant disposal is to the trustees of a settlement if, within the “clawback period” (see CG67068C) (but after the relief was claimed)

  • 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”,

and

  • the transferor is not an individual who has died before the “material time” (see CG67068C).

[TCGA92/S169C (1), (2), (5) and (6)]

The exceptions to this general rule are explained in CG67071.

CG67069+ tell you how the clawback provisions work and what consequential tax adjustments must be made. If the claim for hold-over relief under TCGA92/S260 is revoked or withdrawn, the provisions of TCGA92/S169C will apply as though the claim had never been made (see CG67066).

[TCGA92/S169C (10)]

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.