Gift Relief - Restrictions

Question 1

Restriction for Sales at Undervalue

Answer 1

Full gift relief is not available on a sale at undervalue. This is where the donee pays the donor less than MV for the asset.

Question 2

Excess Proceeds

Answer 2

A sale at undervalue will often lead to a gain being left taxable after gift relief. The gain is equal to excess proceeds:
EP = cash received - base cost

Question 3

Interaction with ER

Answer 3

A gain on a gift may be eligible for both gift relief and ER. Where this is the case, gift relief is applied first. If the full gain qualifies for GR and a claim is made, ER will no apply as there will be no gain left. If part of the gain is left chargeable after GR, ER is available on the balance