Lifetime transfers: basis of valuation: treatment of expenses
Apart from Inheritance Tax (IHT), making a transfer may give rise to Capital Gains Tax (CGT) and other expenses. Their treatment is governed by IHTA84/S164 and IHTA84/S165.
Deal with these incurred expenses in the following way
- if they were borne by the transferor, ignore them in calculating the loss to the estate (IHTM04054)
- if they were borne by the transferee, treat them as reducing the loss to the estate.
You must check that any CGT resulting from the transfer is in fact paid and not held over. The same applies to any Income Tax chargeable on the relevant gain.