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Hi, I read that any asset that goes in and out a trust will have no CGT as you can claim gift holdover relief, but I was doing a question and in the question, a gift of quoted shares were made in to a discretionary trust for the benefit of the grand daughters and in the answer, CGT arose on this gift.
So my question is, why would CGT arise if any asset that goes in and out of a trust will have no CGT.Thank you.
Your first statement is correct – any transfer that is immediately chargeable to IHT is eligible for gift relief, hence quoted shares will qualify on the transfer into a discretionary trust.
If however this is a TX-UK question then this aspect is beyond the syllabus and would NOT be mentioned in the answer, but if it is an Advanced Tax question then gift relief should have been referenced.
I obviously do not know the wording of the question, but a gain will arise on the transfer and should be computed – it is then a separate question about whether a claim is actually made for gift relief to apply to defer that gain which is where the wording of the question needs to be reviewed carefully.
Hope this helps
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