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HMRC internal manual

Capital Gains Manual

National heritage: section 258(5) and (6) TCGA: disposal of assets subject to undertakings

TCGA92/S258 (5) & (6)

The undertaking described in CG73320 lasts until the owner dies or the asset is disposed of. If an asset which is subject to an undertaking is disposed of , the Capital Gains Tax consequences are as follows.

  • The asset is given away and the new owner also gives an appropriate undertaking. Relief is available under TCGA92/S258(3), see CG73320.
  • The asset is given away and the new owner does not give the appropriate undertaking or it is disposed of under some other non-arm’s length transaction. The disposal is deemed to take place at market value and the gain or loss arising is then calculated in the normal way.
  • The asset is sold and Inheritance Tax is chargeable on that occasion, or would be if an inheritance tax undertaking were in force. TCGA92/S258(5) applies and there is deemed to be a disposal of the asset at market value. Because section 258(5) applies relief is available under TCGA92/S258(8). This provides that Capital Gains Tax payable under this bullet or CG73327 is deducted in calculating the value of the asset for Inheritance Tax if Inheritance Tax is payable on the same occasion.
  • The asset is sold by private treaty or given to a body listed in Schedule 3 Inheritance Tax Act 1984 - see CG73330.
  • The asset is accepted by HMRC in lieu of Inheritance Tax - see CG73335.