Case Studies
Tax Planning Case Study: Using Gift Hold-Over Relief for Family Succession
A practical walk-through of how recent changes to Gift Hold-Over Relief can help business owners pass shares to family members with minimum Capital Gains Tax disruption.
By NomadicTax Research Team • 5-8 min read • August 5, 2026
## What Is Gift Hold-Over Relief? (Gifts of Business Assets)
Gift Hold-Over Relief (under section 165 and related sections of the Taxation of Chargeable Gains Act 1992) allows someone to **give away qualifying business assets** (including certain unlisted shares or trading company shares) without immediately paying Capital Gains Tax—the recipient assumes the gain when they eventually dispose of the asset. ([gov.uk](https://www.gov.uk/gift-holdover-relief?utm_source=openai))
## Recent Reform: Draft Legislation Update from June 2026
On **23 June 2026**, the UK government published draft legislation to adjust Gift Hold-Over Relief rules. Key changes include:
- Inclusion of assets that were previously excluded due to the Substantial Shareholding Exemption (SSE) or Intangibles Fixed Assets (IFA) regimes in the calculation of restricted relief amounts. ([gov.uk](https://www.gov.uk/government/publications/capital-gains-tax-relief-on-gifts-of-business-assets/capital-gains-tax-relief-for-gifts-of-business-assets?utm_source=openai))
- These changes are scheduled to take effect for **disposals made on or after 6 April 2027**. ([gov.uk](https://www.gov.uk/government/publications/capital-gains-tax-relief-on-gifts-of-business-assets/capital-gains-tax-relief-for-gifts-of-business-assets?utm_source=openai))
These reforms restore how restrictions operated **before SSE and IFA were introduced**, reducing distortions when parts of a company hold assets not used for the trade's normal operations. ([gov.uk](https://www.gov.uk/government/publications/capital-gains-tax-relief-on-gifts-of-business-assets?utm_source=openai))
## Case Example: Family Succession Plan for an Unlisted Trading Company
### Scenario
- **Pat** owns 60% of an unlisted trading company (“P-Co”) which also has a non-trading investment property and intangible fixed assets (IFA) such as patents or licenses.
- Pat wants to transfer her share to her daughter **Sophie** while alive, to organise succession and reduce estate planning complications.
### Old Rules Before Reform
- Under previous rules, Gift Hold-Over Relief would restrict the relief proportional to non-trading or IFA assets. Non-trading assets in P-Co would reduce the benefit even though the company’s core trading activities are healthy.
- Sophie receiving the gift would take these non-trading assets into account when calculating the base cost for future CGT, reducing the relief. That could lead to larger taxable gains later.
### After Reform (From 6 April 2027)
- With the new rules, assets affected by SSE or IFA regime will be **included** in the restricted asset formula, restoring relief levels closer to what would apply if the company held mostly trading assets. Thus, the non-trading assets will penalise less severely.
- Sophie is likely to benefit by receiving a lower base cost adjustment, meaning less CGT payable when she sells.
## Strategic Advice for Business Owners & Succession
1. **Plan timing of transfers carefully**: If possible, arrange gifts after **6 April 2027** to maximise benefits under new relief rules.
2. **Assess company asset mix**: If non-trading or intangible fixed assets are large, consider ways to restructure them or minimise their effect (e.g., segregate non-trading assets if feasible).
3. **Maintain clear documentation**: Value and classify assets accurately. Gifts allow some flexibility—if you misclassify, future gains could be disputed.
4. **Consider other reliefs**: Hold-over Relief works alongside Business Asset Disposal Relief (BADR) for other types of disposals; also note upcoming CGT rate changes. ([gov.uk](https://www.gov.uk/business-asset-disposal-relief?utm_source=openai))
5. **Estate planning conversations**: If business continuation matters, gift plans might reduce Inheritance Tax as well—but use specialists to align with current legislation.
## Summary
For business owners looking to pass company shares or business assets to family members, the reform to Gift Hold-Over Relief announced in June 2026 opens up opportunities to do so more tax-efficiently. Timing is key: structuring transfers after 6 April 2027 and with an awareness of the company’s asset profile will help you reap the full benefit with less CGT exposure.