CGT—gifts
Produced in partnership with Laura Poots (Barrister) of Pump Court Tax Chambers

The following Private Client practice note produced in partnership with Laura Poots (Barrister) of Pump Court Tax Chambers provides comprehensive and up to date legal information covering:

  • CGT—gifts
  • The general rule
  • Gifts between spouses and civil partners
  • Gifts between connected persons
  • Gifts on which IHT is chargeable—section 260 hold-over relief
  • When is section 260 relief available?
  • Claiming section 260 relief
  • Calculating section 260 relief
  • Restrictions on section 260 relief—residence of transferees
  • Restrictions on section 260 relief—settlor-interested trusts
  • More...

CGT—gifts

A gift of an asset is a disposal for capital gains tax (CGT) purposes. It can, therefore, trigger a CGT charge on the gain deemed to have arisen.

The general rule

The disposal made by way of a gift is deemed to have been made for a consideration equal to the market value of the asset. The donor or transferor is treated as having sold the asset for its market value. The donee or transferee’s base cost will be the market value of the asset. For information regarding the disposal value, see: Introductory guide to CGT.

The same treatment will apply for any bargain made otherwise than by way of bargain at arm’s length, such as a sale at an undervalue.

Any gain triggered on a gift or sale at an undervalue will be taxable in the normal way, and losses will be allowable in the normal way.

Gifts between spouses and civil partners

A gift to a spouse (or civil partner) will not trigger any gain or loss, provided the couple are living together.

The transferor is treated as making the disposal for an amount which would not produce a gain or loss. The transferee’s base cost will be equal to that amount.

For further information on CGT on gifts between spouses, see Practice Note: Asset transfers between spouses.

Gifts between connected persons

An individual is treated as connected with a fairly extensive

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