Gift Hold Over Relief is a valuable form of capital gains tax (CGT relief) that allows you to defer or reduce your CGT bill when you give away or sell certain business assets for less than their market value. Instead of needing to pay capital gains tax immediately, the gain is postponed and passed on to the person receiving the asset.

This relief is often used when gifting shares in a personal company or transferring property and assets used for trading purposes, ensuring that the person making the gift does not face an immediate tax liability.

How Gift Hold Over Relief Works

When you give away or sell a qualifying asset for less than its full market value, the difference is treated as a chargeable gain. Normally, this would trigger a taxable gain and increase your CGT liability.

With holdover relief, however, the relief reduces the tax payable at the point of transfer. The base cost of the asset is instead adjusted for the person receiving it. This means that the tax bill only arises when they sell or dispose of the asset in the future.

For example:

• If you transfer shares worth £100,000 to a family member, the gain can be “held over.”

• The person receiving the shares takes on a reduced base cost.

• When they eventually sell, they may pay CGT on the difference between their sale price and the adjusted base cost.

Who Can Claim Holdover Relief?

To claim holdover relief, both parties involved (the person making and the person receiving the gift) must submit a joint claim, usually within the relevant tax year on a self assessment tax return.

You can claim if:

• You are a sole trader, a partner in a business, or hold at least 5% of the voting rights in a personal company.

• The business assets being transferred are actively used in your trade, a trading company, or a trading group.

• You are transferring shares in a personal company that is not listed on a recognised stock exchange.

Partial relief may apply if the asset was only partly used for trading purposes.

Types of Assets That Qualify

Qualifying business assets include:

• Shares in a trading company or personal company

• Assets used for business or trading purposes

• Agricultural property and certain personal possessions used in trade

Non business assets, such as investment property held in a holding company, will usually not qualify unless different rules apply in certain circumstances.

Interaction With Other Reliefs

In some situations, gift relief can be used alongside other available reliefs, such as:

• Business Asset Disposal Relief (previously Entrepreneurs’ Relief) to reduce the CGT rate

• Inheritance Tax relief when planning your estate

• Allowable losses from other investments to reduce a future tax bill

When planning a transfer, it’s important to consider the tax liability, income, and other reliefs available to ensure the most effective outcome.

Special Considerations and Rules

• Transfers between spouses or a civil partner are generally exempt from CGT, meaning no immediate tax payable.

• Transfers into a discretionary trust can qualify for holdover relief if the rules apply.

• Non residents may face different rules depending on the type of property or company involved.

• The next tax year deadlines apply for submitting claims on your tax return.

Claiming Holdover Relief

To make a claim:

1. The person making and person receiving the gift must complete a joint claim form.

2. This claim is submitted with your self assessment tax return.

3. You will need details of the asset, market value, and the gain being held over.

The relief is not automatic; you must actively claim holdover relief for it to apply.

Get help with Gift Hold Over Relief

Gift Hold Over Relief provides a flexible way to manage capital gains tax when transferring business assets or shares in a trading company. By deferring the cgt bill, it helps business owners, individual investors, and families plan more effectively, reduce their tax liability, and support succession or estate planning.

For more detail on whether you can claim holdover relief or how it interacts with business asset disposal relief, inheritance tax, or other CGT relief options, get in touch…

Source: HM Revenue & Customs | 01-09-2025