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I3.611 Interaction between IHT and CGT on lifetime dispositions

Any lifetime transfer of value which involves the disposition of property other than cash will also involve a disposal of that property for CGT purposes.

CGT is charged on any capital gain accruing to a transferor in respect of the increase in the capital value of an asset between the time of its acquisition and its subsequent disposal including the cost of any enhancements that may have made to the asset while it was in their ownership. The CGT annual exemption is may also be deducted if it is available.

As the transferor will have received either no consideration or only partial consideration, the disposal will be deemed to be at market value¹. See C2.109 for more details.

The transferee will take this value as their base cost, subject to any holdover claim (see I3.612–I3.614A). A holdover claim may be available under TCGA 1992, s 165