Finance Act 1975

4 (1) Where a chargeable transfer is or includes a disposal of an asset and on the disposal a gain accrues to the transferor for the purposes of Part III of the [1965 c. 25.] Finance Act 1965, then, if—

(a) the whole or part of the gain is a chargeable gain or a development gain ; and

(b) the whole or part of any capital gains tax or income tax chargeable on the gain is borne by the donee (within the meaning of paragraph 19 of Schedule 7 to that Act);

the amount of the tax so borne shall be treated as reducing the value transferred by the chargeable transfer.

(2) Where the chargeable transfer is made under Schedule 5 to this Act, sub-paragraph (1) above shall have effect as if for the reference to the transferor there were substituted a reference to the trustee.