12For section 25A of the Finance Act 1965 there shall be substituted the following section:—
(1)Where the value of any asset comprised in a gift inter vivos is by virtue of section 22(5) of the Finance Act 1975 included in the value of the estate of any person for the purposes of capital transfer tax, and at the time of that person's death the asset—
(a)is owned by the donee, or
(b)is property settled by the gift or property which for the purposes of section 38 of the [1957 c. 49.] Finance Act 1957 or section 1 of the [1957 c. 15 (N.I.).] Finance Act (Northern Ireland) 1957 would by virtue of subsection (9) thereof be treated as property settled by the gift,
then, subject to subsection (2) below, the asset shall for the purposes of this Part of this Act be deemed to be disposed of and immediately re-acquired at that time by the donee or trustee for a consideration equal to the value so included; but no chargeable gain shall accrue on the disposal.
(2)Where the value so included is reduced by virtue of section 35 of the [1968 c. 44.] Finance Act 1968 or section 1 of the [1968 c. 17 (N.I.).] Finance Act (Northern Ireland) 1968, the appropriate portion only of the asset shall be deemed to be so disposed of and re-acquired ; and for this purpose the appropriate portion is the reduced value so included divided by the value before the reduction.”