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)
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)
- These changes are scheduled to take effect for disposals made on or after 6 April 2027. (gov.uk)
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)
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
- Plan timing of transfers carefully: If possible, arrange gifts after 6 April 2027 to maximise benefits under new relief rules.
- 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).
- Maintain clear documentation: Value and classify assets accurately. Gifts allow some flexibility—if you misclassify, future gains could be disputed.
- 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)
- 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.