CGT and IHT

The same transaction - a gift of a chargeable asset in lifetime - may indeed be chargeable to both CGT and IHT albeit at different times. When the gift is made a gain must be computed based on the market value of the asset and the donor would be liable for the CGT payable. For IHT the gift would be a PET and no IHT would be payable at the time of the gift but if the donor died within 7 years then the PET would become chargeable to IHT and any tax payable would then be paid by the donee. If of course the gift was eligible for gift relief then the gain would be deferred by reducing the base cost to the donee and thus the donee would effectively bare both the IHT cost and the CGT. That said there may be no taxes to pay as the gain may be covered by the AEA of the taxpayer and the PET may fall within the nil rate band. This is a most interesting area for planning and is dealt with in the P6 exam!

If someone makes two gifts (more specifically A CLT) in almost the same tax year just some trivial gap in the date the gift was made e.g one gift was made on 07/01/2015 and the second gift being made 07/03/2015. Would the first gift made at 07/01/2015 be deductible as CGT made within 7 years from the relevant Nill rate band associated with the second gift?

Sorry but really not sure what you mean here?? You seem to be confusing your IHT computations with the CGT comps?

What I mean here is that if the first gift made to the trust had a chargeable value and this was in the same year as the second gift. would the first gift be deductible from the nill rate band available for the second gift as a Gross chargeable transfer made within 7 years? Scooping it to a single line, are the clt made within the same year deductible as a gct made within 7 years, had we been calculating the taxable amount for the second gift? hope this makes clear to you :)

If a second CLT is made within 7 years of an earlier CLT then yes the nil rate band available for the second CLT will have been reduced by the amount of the gross chargeable transfer of the first CLT. It is irrelevant whether the second CLT is in the same year as the first one, all that matters is if it was within 7 years of that earlier transfer!

Thank you :) Sir!

Sir, when calculating gain for corporation, there is a formula for calculating indexation allowance (RPI on disposal - RPI on acquisition) / RPI on Acquisition. But if we use RPI on disposal / RPI on acquisition it gives the indexed cost. So do we need to show index allowance separately in a proforma or can we use the the second formula and show indexed cost directly? Thanks

You need to show the separate calculation of indexation allowance as you must remember that it cannot increase or create a loss