CG10280 - Interaction with Inheritance Tax

TCGA92/S274

Up to 30 March 1971, inclusive, Capital Gains Tax imposed a charge on the occasion of death but the Capital Gains Tax was deducted in arriving at the estate duty payable. The Capital Gains Tax value of an asset was (with one exception) conclusive of its value for Estate Duty purposes. On or after 31 March 1971 death is no longer an occasion of charge for Capital Gains Tax purposes. Furthermore, the valuation rules have been reversed so that the estate duty, Capital Transfer Tax or Inheritance Tax agreed valuation of an asset is conclusive, in all cases, of the value for Capital Gains Tax purposes as at the date of death.

TCGA92/S258 & TCGA92/S260

The existence of a possible charge to Inheritance Tax does not affect the computation of the chargeable gain or allowable loss, except where relief is available under TCGA92/S258 in connection with

• works of art, etc, see CG73300+
• historic houses and associated assets, see CG73300+
• preservation of land for public benefit, see CG73300+.

Gifts hold-over relief may be claimed under TCGA92/S260 (2)(a) if Inheritance Tax is charged on the gift. Hold-over relief may also be claimed in certain other circumstances listed in Section 260(2) where there is no Inheritance Tax charged because of some relief or exemption.

Where a claim for hold-over relief has been or could have been made, the Inheritance Tax charged on that occasion (or, if less, the amount of the chargeable gain disregarding the adjustment for the amount held-over or which could have been held over) can be claimed as a deduction in the computation of the chargeable gain on the subsequent disposal. (See CG67051).

Any enquiries about Inheritance Tax should be referred to CAR Inheritance Tax.

Should you come across a foreign document which you need translated contact HM Revenue & Customs, Translation Service, (ESS), using the form C&E54 which can be downloaded from their Intranet Home Page (Estates & Support Services, Services A to Z, Translation Services).

Where you need some information about the relevant country's tax system, then contact the International Tax Research Team, Kai Customer Performance & Analysis, HMRC, LG75, 100 Parliament Street, London, SW1A 2BQ, 020 7147 2722. You are encouraged to use the libaryenquiries@hmrc.gsi.gov.uk address.