Home 5 Capital Gains Tax 5 Taxable gains on gifts

Taxable gains on gifts

2 November 2023

Gift Hold-Over Relief allows deferring Capital Gains Tax when giving assets or selling below market value. Both giver and recipient benefit, provided certain eligibility criteria are met.

Gift Hold-Over Relief is a tax relief that effectively defers Capital Gains Tax (CGT). The relief can be claimed when assets are given away (including certain shares) or sold for less than they are worth to help benefit the buyer. The relief means that any gain on the asset is ‘held-over’ until the recipient of the gift sells or disposes of them. This is done by reducing the donee’s acquisition cost by the amount of the held over gain.

The person gifting a qualifying asset is not subject to CGT on the gift. However, CGT may be payable when the asset is sold for less than it’s worth. Gifts between spouses and civil partners do not trigger capital gains. A claim for the relief must be made jointly with the person to whom the gift was made.

If you are giving away business assets, you must:

  • be a sole trader or business partner, or have at least 5% of voting rights in a company (known as your ‘personal company’); and
  • use the assets in your business or personal company.

You can usually claim partial relief if you used the assets partly for your business.

If you are giving away shares, then the shares must be in a company that is either:

  • not listed on any recognised stock exchange; or
  • your personal company.

The company’s main activities must be in trading, for example providing goods or services, rather than non-trading activities like investment.

Source: HM Revenue & Customs Tue, 31 Oct 2023 00:00:00 +0100

You may also like these

Here are some more articles that might interest you

Expert Advice

If you’d like more information on anything you’ve read, we’re here and happy to help