Taxation of Chargeable Gains Act 1992 section 74

Effect on sections 72 and 73 of relief under section 165 or 260

Section 74 deals with how the normal death uplift rules for trust assets are modified when an asset was originally transferred into the trust using gift hold-over relief.

• Where an asset was gifted into a trust with hold-over relief and is later deemed disposed of on a beneficiary becoming absolutely entitled or on the death of a life tenant, the normal tax-free uplift on death does not fully apply.
• Instead of the usual exemption from capital gains tax on the deemed disposal at death, the trustee is charged to tax but only on an amount up to the held-over gain that was deferred when the asset was originally gifted into the trust.
• Where only part of the trust asset qualifies for the reduced charge on death under section 73(2), the special restriction in this section does not apply directly; instead, the reduction otherwise available under section 73(2) is itself reduced by a proportionate share of the held-over gain.
• The held-over gain is the gain that was deferred at the time the asset was originally transferred into the trust under the gift hold-over relief provisions of section 165 or section 260.