Holdover Relief (also known as Gift Hold-Over Relief) allows a gain that would otherwise arise on a disposal to be deferred (“held over”).

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Instead of the transferor paying CGT at the time of the transfer:

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• The gain is deducted from the recipient’s base cost, and
• The tax is effectively deferred until the recipient disposes of the asset

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This allows assets to be transferred without an immediate CGT liability, provided certain conditions are met.

Holdover Relief is generally available in the following situations:

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Gifts of Business Assets

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Relief may be available where qualifying business assets are transferred, including:

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• Interests in trading businesses
• Shares in unlisted trading companies
• Certain business-use assets

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The asset must meet the relevant statutory conditions, and the transfer must not be at arm’s length consideration.

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Transfers into Trust

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Holdover Relief can also apply where assets are transferred into certain types of trust, including:

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• Discretionary trusts
• Other relevant property trusts

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In these cases, relief is often available regardless of whether the asset is a business asset.

Where relief is claimed:

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• The gain is not taxed at the time of transfer
• Instead, it is “held over” and passed to the recipient
• The recipient acquires the asset at a reduced base cost

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This means that CGT will arise when the recipient eventually disposes of the asset, unless further reliefs are available at that time.

Holdover Relief is subject to a number of important conditions:

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• The transfer must usually be a gift or at undervalue
• Both parties must typically jointly claim the relief
• The asset must qualify under the relevant provisions of the legislation

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Relief may be restricted or unavailable where:

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• The asset is not a qualifying business asset (outside trust scenarios)
• The transfer gives rise to a chargeable gain with consideration received
• Anti-avoidance rules apply

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Careful analysis is required to ensure that relief is available and correctly claimed.

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Holdover Relief may be relevant in certain property contexts, particularly where:

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• Property forms part of a trading business
• Property is transferred into a trust structure
• Assets are being reorganised for succession planning purposes

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However, relief is not generally available for investment property held personally, which is a common area of misunderstanding.

When used appropriately, Holdover Relief can support:

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• Succession planning and intergenerational transfers
• Business restructuring
• The establishment of trust structures

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However, deferring tax does not eliminate it. The long-term tax position must always be considered, including the recipient’s future exposure to CGT.

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Holdover Relief involves detailed legislative requirements and interaction with other tax regimes, including Inheritance Tax and SDLT.

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We advise on:

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• Eligibility for Holdover Relief
• Structuring transfers to meet statutory conditions
• Preparing and submitting claims
• Interaction with wider tax planning, including trusts and property structures

Holdover Relief can be a valuable tool in succession planning and business restructuring, but its application depends on a detailed understanding of both the legislation and the wider tax context. While the relief allows Capital Gains Tax to be deferred, it also shifts future tax exposure to the recipient, making it important to consider the long-term implications of any transfer.

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Understanding whether the relief is available, and whether it is appropriate in the circumstances, is an essential part of planning any transfer of assets, particularly where trusts, business interests or property are involved.

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If you are considering transferring assets, restructuring ownership, or would like to review an existing arrangement, we can provide clear, practical advice tailored to your circumstances.

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Contact our team to discuss your position and ensure any relief is applied correctly and efficiently.

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