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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Gifts: hold-over relief: recovering held-over gain: procedures

This guidance tells you how to recover a held-over gain. Before you do this, you need to find out if any part of the asset has been disposed of before the donee became non-resident. CG67340+ tells you what to do after this if you decide a held-over gain has to be recovered.

Asset previously disposed of

If you find that the whole of the asset has been disposed of before the donee became non- resident, then no chargeable gain arises when they become non- resident.

No previous part-disposal

If you find that no part of the asset has been disposed of before the donee become non- resident, then the donee is deemed to have made a chargeable gain equal to the held-over gain immediately before they became non- resident.

Previous part-disposals: General

If you find that there have been part-disposals of the asset before the donee became non- resident, then you reduce the held-over gain, or any balance not previously recovered, by the same part-disposal formula that you used in calculating the gains on the part-disposals and assess the amount which is left. CG12730+ and, in the case of shares CG51575 and CG51622, tell you more about part- disposals.

Previous part-disposals: Leases

In the case of subleases granted out of short leases, the formula used should be that applied to reduce the acquisition cost of the lease, see CG71000+.

Previous part-disposals: Land

Where there has been a small part-disposal of land and you have adjusted the cost using TCGA92/S242, see CG71870+, those adjustments should not be regarded as recovering any part of the held-over gain.

Previous disposals: Husband and wife

In deciding whether any held-over gain should be withdrawn you ignore any transfers of assets on which hold-over relief was claimed from one spouse to another or from one civil partner to another. If, however, the spouse or civil partner receiving the asset then disposes of it, that is treated as a disposal by the other spouse or civil partner.

For example, if the husband claimed hold-over relief on an asset gifted to him, transferred that asset to his wife who then disposed of it, that disposal is counted as a disposal by the husband for these purposes.