Gift relief

MOHMEDSALIM PATEL

IS THERE ANYONE ONE WHO CAN EXPLAIN ME HOW GIFT RELIEF WORKS ?

AS MY UNDERSTANDING IS, IF DONOR CLAIM GIFT RELIEF THAN THE RECIPIENT WILL PAY MORE CAPITAL GAIN TAX IN FUTURE ? RIGHT OR WRONG

BUT NEED DETAIL EXPLANATION PLEASE.

:confused1:

Gem7321

Basically any chargeable gain is deferred onto the person who it is gifted to, then the gain is realised when that person sells the asset. The gift is deemed to be at the market value of the asset at that time and the deferred gain is the gain before taper relief.

Eg.

John purchased business premises in July 2001 for £80,000. In December 2005 John gave the premises, valued at £400,000, to Phil and claimed gift relief. Phil continued to run the business from the premises but then sold them in May 2007 for £675,000.

So, the deferred gain/gift relief is 400,000-80,000 = 320,000

Then the gain when Phil sells = Proceeds 675,000
Less deemed cost = 400,000
Plus gift relief = 320,000
Gain before taper = 595,000