Taxation of Chargeable Gains Act 1992 Schedule 7 paragraphs 2–3

Settled property

Section 165 (Schedule 7 paragraphs 2–3) deals with how gift hold-over relief applies when trustees of a settlement dispose of qualifying business assets or agricultural property otherwise than at arm's length.

• Trustees can claim gift hold-over relief on disposals not at arm's length of qualifying business assets, provided both the trustees and the transferee (or the trustees alone, if they are also the transferee) make a joint claim under section 165.
• Qualifying assets are those used in a trade, profession or vocation carried on by the trustees or by a beneficiary with an interest in possession, or shares and securities in a trading company (or holding company of a trading group) that are either unlisted or where the trustees hold at least 25% of the voting rights.
• Where hold-over relief applies to a trust disposal, references to the "transferor" in the relief provisions are read as references to the trustees, and the restriction that normally prevents relief on deemed disposals arising when a beneficiary becomes absolutely entitled or a life interest ends on death does not apply.
• Agricultural property that would not otherwise qualify because it is not used for a trade can still benefit from hold-over relief if inheritance tax agricultural property relief applies, would apply, or would apply but for the clawback rule in section 124A of the Inheritance Tax Act 1984.