Tax Planning
Navigating Tax Relief on Gifting Business Assets: UK Draft Legislation Explained
Significant changes to Capital Gains Tax relief on gifts of business assets were proposed in June 2026—here’s what businesses and individuals need to know now.
By NomadicTax Research Team • 5-8 min read • July 19, 2026
## What is changing?
In the **Tax Update 2026** on 23 June 2026, the UK government published **draft legislation** on reforms to **Capital Gains Tax (CGT) relief for gifts of business assets**. The document explains proposed changes to modernise how relief works when business assets are gifted—particularly covering the **Hold-Over Relief** rules. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-2026-simplification-modernisation-and-fairness/tax-update-2026-simplification-modernisation-and-fairness-summary?utm_source=openai))
## Key proposals and implications
### What is Hold-Over Relief?
Hold-Over Relief allows someone to gift a business asset without paying CGT immediately. Instead, the recipient inherits the donor’s acquisition cost; the CGT is **deferred** until the recipient disposes of the asset. ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg66880?utm_source=openai))
### Proposed changes
- Relaxation of restrictions for assets that fall under the **Intangible Fixed Assets regime** or potentially under the **Substantial Shareholding Exemption**, which currently may be excluded. This would broaden eligibility. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-2026-simplification-modernisation-and-fairness/tax-update-2026-simplification-modernisation-and-fairness-summary?utm_source=openai))
- Draft legislation will update formulas used to *restrict* relief in certain cases—ensuring more business assets can qualify. ([gov.uk](https://www.gov.uk/government/publications/summary-of-tax-update-2026-simplification-modernisation-and-fairness/tax-update-2026-simplification-modernisation-and-fairness-summary?utm_source=openai))
### Effective dates
These changes are proposed in draft legislation as of June 2026. They will first undergo consultation and, if enacted, apply to disposals or gifts made **after the relevant effective dates**, which may vary per asset type. It’s not yet law. ([gov.uk](https://www.gov.uk/government/publications/capital-gains-tax-relief-on-gifts-of-business-assets?utm_source=openai))
## Who is most affected?
- **Sole traders, partners, personal company shareholders** who regularly make or receive business asset gifts
- **Non-corporate businesses**—especially where assets include intangible property such as goodwill, patents, or copyright
- Those setting up **succession or estate planning**, since broader qualification may offer more flexibility and tax efficiency
## Practical examples
| Scenario | Before change | After proposed reform |
|---|---|---|
| Gifting intangible assets like IP | May be excluded because current rules restrict items not used in trade or covered under exemptions | New rules aim to include more intangible fixed assets, reducing exclusion risk |
| Gifting shares to family company | Relief restricted or denied under existing formula or foreign-control rules | Formula reforms could allow more gifts to qualify correctly without triggering full CGT charge |
## Actionable steps
1. **Review your current gifting strategy.** If you’ve been prevented from using Hold-Over Relief due to exclusions, assess how the proposed changes might affect you.
2. **Track proposed legislation.** Because this is still in draft, keep an eye on public consultations and impact notes via the HMRC website. ([gov.uk](https://www.gov.uk/government/consultations/vat-treatment-of-land-for-social-housing?utm_source=openai))
3. **Budget for timing adjustments.** Gifts or disposals near proposed thresholds should consider delay until new rules are confirmed, where advantageous.
4. **Seek specialist advice.** Complex cases—especially involving trusts, estates or non-resident donors—may require legal or tax advisory input.
## Takeaway
The proposed reforms to CGT relief on gifts of business assets signal a shift toward **greater inclusivity**, especially for modern assets like intangible property, and a better alignment with business needs. While the legislation is not final, being prepared can offer opportunities for reduced tax liabilities and more flexible planning.