There is no income tax or CGT on receiving the gift.
However, provided the donor has no future rights to the gift, and he/she lives for 7 years the gift escapes Inheritance Tax (IHT) as well.
If the donor passes away within 7 years there may be IHT on his/her estate depending on the value of the estate.
The rules in the current tax year are:
First: Nil Rate Band - £275k of the estate taxed at 0%
Everything in excess of this is taxed at a flat rate of 40%.
Your relative should be aware that on death any gifts made within the last 7 years come back into the estate first, and this normally takes up the nil rate band first, and then the rest of the assets are added up to value the estate. Any outstanding loans are deducted from this figure too to reduce the estate.
There is a way to make gifts that you may be interested in which gets around these rules, at least partially.
See my response in this link to find out how:
http://www.taxationweb.co.uk/forum/discuss.php?id=5271
Don't hesitate to come back to me for more info,
regards,
Arnold Aaron
Investment and Inheritance Tax Planner
Zurich Advice Network
e mail:
arnold.aaron@zurichadvice.co.uk
Tel: (office) 0208 437 2500 (m) 07957 440 724
[I advise on Inheritance Tax Planning, and specialise in Discounted Gift Trusts and Investments]