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.