Gift Hold-Over Relief

Our experts explain everything you need to know about the Gift Hold-Over tax relief

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

What is Gift Hold-Over Relief?

Gift Hold-Over Relief is a kind of tax relief to set against your Capital Gains Tax liability and it could reduce your tax bill. It only applies to business assets not personal possessions. If you give away business assets (and these assets can include certain types of shares), or sell them for less than they are worth to help the buyer, you might be able to claim Gift Hold-Over Relief. This means that you won’t have to pay Capital Gains Tax when you give the assets away – instead, the person you give them to pays the Capital Gains Tax on them (if there is any to pay) when they sell or dispose of the assets you have given them.

It can’t be claimed against gifts given to your spouse, civil partner or a charity because Capital Gains Tax isn’t usually payable in these circumstances anyway.

Who is eligible for Gift Hold-Over Relief?

HMRC set certain conditions in claiming this tax relief, depending on whether you are giving away actual business assets or whether you are giving away shares.

If you are giving away business assets, the following conditions must apply for you to be able to claim this tax relief:

  • You must be a sole trader or business partner, or you must have at least 5% of shares and voting rights in the company – HMRC term this as your ‘personal company’.

  • You must use the assets that you are giving away in your business or personal company. You can’t use this relief to offset against any Capital Gains Tax you might owe for disposing of your personal possessions. If you used any personal possessions partly for business use, you can get partial relief but not the full amount.

If you are giving away shares, the following conditions must apply:

  • The shares must be in a company that is not listed on any recognised stock exchange.

  • The shares must be in your personal company (they can’t be just any shares that you might own).

How do you work out the Gift Hold-Over Relief?

If you give any assets away, you don’t pay Capital Gains Tax, but you might need to pay Capital Gains if you sell an asset for less than it is worth to help the buyer or if you make a gain (profit) on what you originally paid for the asset.

The person you give the asset to will need to include its cost when they work out their gain (profit) at a later date, if they decide to sell that asset.

For example, if you sell an auto garage worth £90,000 to your cousin for £45,000 but it originally cost you £30,000, you would need to include the £15,000 gain (profit) you made when you are working out your total taxable gain – how much gain you have made from the sale of your assets over a tax year. Your cousin would then need to include its cost when they work out the gain on the garage should they sell it later.

How do you claim Gift Hold-Over Relief?

You need to claim this relief jointly with the person you have given the asset to. You send your claim to HMRC at the same time you gift that person the asset. Of course, we know how complicated this can sound and that’s why sometimes, it pays to get expert help so call our friendly team on 0330 122 9972 and we can help you sort it out.

How can DSR Tax Claims Help?

We know that claiming your full tax relief can be a complicated affair, even with our helpful guide to tell you everything you might need to know. It’s all very well reading about it and knowing what HMRC’s stand on it is – but how do you apply that to your own circumstances? It can seem like an absolute minefield but help is always available and you don’t need to battle through this alone. Our team of experts at DSR Tax Claims are always on hand to help our client and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

This page was last updated on 24/10/2018.

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