Tax Planning
Relief on Gifts of Business Assets: What UK Entrepreneurs Need to Know
The UK is modernising Capital Gains Tax hold-over relief for business asset gifts — this article breaks down what’s changing, who’s affected, and how you can plan ahead to optimise tax outcomes.
By NomadicTax Research Team • 5-8 min read • June 27, 2026
## What’s Changing?
In the **Tax Update 2026: Simplification, Modernisation and Fairness** papers, HMRC has published **draft legislation** to modernise *Capital Gains Tax (CGT) gift hold-over relief for business assets*. ([gov.uk](https://www.gov.uk/government/collections/taxupdate-2026-simplification-modernisation-and-fairness?utm_source=openai)) The proposed reform restores how reliefs 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 It Affects
- Individuals or businesses gifting business assets (e.g., shares, property) where the gift hold-over relief currently applies.
- Companies holding assets not used in trade, where distortions under past regimes are causing higher effective tax burdens. ([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))
- Advisors helping with estate planning, shareholder structuring, or asset transfers.
## Key Issues You Should Consider Now
| Issue | Why It Matters | Practical Implication |
|---|---|---|
| Asset eligibility | Some business assets held by non-trading companies may have lost access to full relief due to previous regime changes. | Review your asset holdings now; identify which assets may benefit once the reform passes. |
| Timing of gifts | If you plan to transfer assets, schedule before the new rules take effect (or as advised). | Gifts made after legislation becomes effective may use different relief rules. |
| Interactions with other reliefs | The old Substantial Shareholding Exemption and the Intangible Fixed Assets rules changed how reliefs overlap. | Model scenarios under both current and proposed regimes to detect tax savings or unexpected liabilities. |
## Actionable Steps to Take
1. **Audit your business assets** — make a detailed list of assets you've gifted or intend to gift, and those held by companies not actively trading.
2. **Engage with your tax advisor early**, particularly if you have clients/entities approaching thresholds or with assets likely to benefit.
3. **Model both current and proposed rules**, to see where tax savings emerge and whether moving assets before changes helps.
4. **Monitor the draft legislation**, review the published wording once available to confirm exact eligibility, timing, and any anti-avoidance provisions.
## Example Scenario
Sarah runs a small tech firm that holds several patents and investments. She plans to gift one patent to a trust and some shares to her child. Under current rules, some hold-over relief is available, but patches from the Intangible Fixed Assets regime limit relief for assets not used in trade. Under the proposed reform, Sarah may qualify for broader relief, significantly reducing CGT liabilities both now and in her estate plan. But only gifts made after legislation takes effect (once enacted) will enjoy updated rules.
**Bottom line**: If you hold business assets, gifts are in your future, or you’re advising clients, these CGT changes could unlock considerable savings — but timing, eligibility, and accurate planning are essential.