Overview
In June 2026, HM Revenue & Customs released a policy paper detailing changes to Capital Gains Tax (CGT) relief on gifts of business assets. These reforms address how assets within certain regimes—Substantial Shareholding Exemption (SSE) and Intangible Fixed Assets (IFA)—are treated when donors make gifts, impacting hold-over relief calculations. (gov.uk)
What Are the Changes?
- Under current law, holders of shares or securities in trading companies or holding companies may gift assets and use business asset hold-over relief, avoiding immediate CGT if the recipient takes on the donor’s base cost. But assets under SSE or IFA regimes were excluded from some restrictions. (gov.uk)
- New law will treat those previously excluded assets as chargeable assets, thus including SSE or IFA assets in the formula that determines how much relief is allowed when non-trading assets are present. Essentially, this restores a more balanced restriction formula. (gov.uk)
When Does It Take Effect?
- The measure applies to disposals made on or after 6 April 2027. (gov.uk)
Who It Impacts
- Individuals gifting shares or securities of a trading company (or group) where it’s the donor’s personal company or unlisted shares.
- Situations involving succession planning where non-trading assets are part of a company/group’s holding.
Planning Tips
- Review your holdings early: Identify assets under SSE or IFA. If you have non-trading assets mixed in, the amount of relief on a gift could be limited under the new rules.
- Gift before the operative date: If eligible, consider making gifts before 6 April 2027 to avoid the new restrictions for high-cost non-trading assets.
- Document valuations carefully: Since the formula for hold-over relief involves valuations of trading vs non-trading assets, accurate book valuation of non-trading assets becomes more important.
- Seek professional advice: Especially for mixed asset companies or private businesses, the tax difference under new rules could be material.
Example Scenario
Case: Anna owns an unlisted personal company. The company holds both trading assets (core business) and non-trading assets (say, investment properties not involved in core trading). She intends to gift some shares to her daughter.
- Under current law, she might be able to claim hold-over relief generously if non-trading assets are small or excluded by SSE/IFA.
- After 6 April 2027, those non-trading assets are included in the calculation. If non-trading assets are significant, relief is reduced—meaning more of the gain is taxed at the gift stage (or later).
What You Should Do Now
- Assess the value of non-trading vs trading assets in your business/group.
- Determine whether gifting now (before April 2027) is beneficial.
- Update your succession or estate planning accordingly.
Takeaway: These changes restore balance between trading and non-trading assets when you gift business assets. If non-trading assets are part of your holdings, waiting until after the change may limit the relief. Planning ahead will help minimize surprise tax bills.