Tax Planning
Navigating the New UK Capital Gains Tax Relief for Gifts of Business Assets
A major reform to Capital Gains Tax (CGT) for gifts of business assets aims to correct distortions caused by recent regimes—here’s what’s changing and how business owners can prepare.
By NomadicTax Research Team • 5-8 min read • July 26, 2026
## What’s Changing
In the **Tax Update 2026: Simplification, Modernisation and Fairness**, the UK government published **draft legislation to modernise Capital Gains Tax (CGT) gift hold-over relief** for business assets. The reform will update the rules when a company holds assets **not used within its trade**, restoring the relief rules to how they operated before the introduction of the Substantial Shareholding Exemption and the Intangible Fixed Assets regime. ([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))
## Who Is Affected
- Individuals or companies that give **business assets to others** (e.g. family members or new co-owners) may use hold-over relief to defer CGT liability.
- Companies holding **non-trading assets**—such as investments, intangibles, or land not used in trade—can no longer relyon previously lenient rules; this reform aims to remove mismatches.
- Beneficiaries who would otherwise face a high effective rate of tax due to existing distortion from SCC (Substantial Shareholding Exemption) or Intangibles Fixed Assets regime will get fairer treatment.
## Practical Example
Imagine Jane owns a business and wants to gift a piece of land (not used for her trade) worth £100,000 to her daughter. Under current rules, relief is restricted due to the Intangibles Fixed Assets regime, which might require some gain to be recognised immediately. After reform, if the land is treated as a non-trading asset, she could get the same relief as would have applied before those regimes—deferring the gain until the daughter disposes of the land.
## Steps to Take Now
1. **Review your portfolio of business assets**, especially those not actively used in trade (e.g. investment assets, land).
2. If planning a gift, **model the tax impact** under both current and proposed rules to forecast cashflow and deferred gains.
3. **Engage with legal/tax advisers** to plan the timing of gifts—before legislation becomes final—to maximize relief.
## Implementation & Key Dates
- The draft legislation was published on **23 June 2026**. ([gov.uk](https://www.gov.uk/government/collections/taxupdate-2026-simplification-modernisation-and-fairness?utm_source=openai))
- It’s expected to be included in **Finance Bill 2026-27**, likely becoming law during 2027. Businesses planning gifts should keep an eye on that Bill.
## Implications for Business & Estate Planning
- Greater consistency and fairness for donors and recipients.
- Fewer unexpected tax bills due to non-trading assets.
- Estate and succession plans should be revisited to ensure gifts are structured to benefit from the reformed hold-over relief.
**Takeaway:** If you own business assets—particularly outside your trade—and anticipate gifting them, now is the time to review and plan ahead. Waiting until the legislation is enacted may limit your flexibility or lead to less favourable outcomes.