CG12920 | Gifts and Capital Gains Tax: introduction

These instructions tell you about the basic Capital Gains Tax treatment of gifts. You will find more information on the various reliefs for gifts at CG66450+.

In this section of the instructions the word ‘gift’ describes a transfer from one person to another either for no consideration at all or otherwise than by way of a bargain made at arm’s length. It includes gifts in settlement, see CG35700. It also includes an occasion upon which a beneficiary becomes absolutely entitled as against the trustees of a settlement, see CG37000.

Market Value
No gain/No loss transfers
Reliefs

Market Value

Because a gift is not a bargain at arm’s length, the person making the gift is treated as disposing of the asset at market value, unless it is a situation within the paragraph below headed ‘No gain/No loss transfers’.

The person acquiring the gift is treated as acquiring the asset at its market value at the time of disposal.

CG16330+ tells you about market value.

CG14540 tells you about bargains which are not at arm’s length.

If you need help about

• the time of disposal of an asset for Capital Gains Tax purposes, see CG14250P and CG35700

• gifts of copyright and the procedures to be followed in Districts, see BIM50745

• gifts of certain important works of art, scientific collections, etc and of assets given in connection with the preservation of historic houses or of land for the public benefit, see CG73300+.

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No gain/No loss transfers

Gifts to certain bodies are treated as made on a no gain/no loss basis. These are gifts to the following

• Spouses or civil partners

• Charities, registered community amateur sports clubs or specified institutions

• Employee trusts

• Housing associations

• The nation or various bodies, of assets considered to be national heritage

If the transfer is an outright gift or for a consideration less than the allowable expenditure within TCGA92/S38, it is treated as a transaction producing neither gain nor loss. For other disposals the market value rule is suspended and only the actual consideration is taken into account.

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Reliefs

The most common form of relief which is available in cases involving gifts is hold-over relief. The rules for hold-over relief changed with effect from 14 March 1989 and the instructions at CG66880+ tell you how to deal with claims to hold-over relief for business assets under the revised rules. If you are dealing with a gift before that date, you will find a summary of the previously applicable rules at CG66881.

The main sections dealing with the various gift reliefs and exemptions are: