Capital Transfer Tax Act 1984

148 Mutual transfers: exemption for donee's gift

(1) This section and section 149 below have effect where—

(a) a person (" the donor") makes a chargeable transfer (" the donor's transfer") which increases the estate of another person ("the donee "), and

(b) the donee, within the period of ten years begirining with the date of the donor's transfer, makes a transfer of value (" the donee's transfer ") which either—

(i) is made in the donor's life-time and increases the value of the estate of the donor or his spouse, or

(ii) is made within two years after the donor's death and increases the value of the estate of the donor's widow or widower.

(2) The donee's transfer shall be an exempt transfer to the extent to which the value thereby transferred does not exceed—

(a) the amount by which his estate was increased by the donor's transfer, or

(b) if there has been a previous donee's transfer, so much of that amount as has not been taken into account under this subsection for exempting that transfer.

(3) In subsection (1) above references to a transfer are references to a transfer that is a disposition between individuals, including any disposition treated as made by virtue of section 3(3) above but not anything else that is treated as a disposition for the purposes of this Act.

(4) Subsection (1)(b) above has effect in relation to a person as the donor's spouse, widow or widower only if at the relevant time both the donor and that person were, or neither of them was, domiciled in the United Kingdom; and for that purpose the relevant time is, in the case of a spouse, the time of the donee's transfer and, in the case of a widow or widower, the time of the donor's death.

(5) The extent to which the donee's transfer is an exempt transfer by virtue of subsection (2) above shall be determined without regard to Chapters I and II of this Part of this Act, and those Chapters shall not apply to that transfer to the extent to which it is an exempt transfer by virtue of that subsection.