Answers · UK 2025/26

What is holdover relief for Capital Gains Tax and when can it be used?

Gift Holdover Relief (TCGA 1992 ss.165 and 260) lets you defer CGT when gifting qualifying business assets or assets that are immediately chargeable to IHT. The gain is "held over" -- the recipient takes your original base cost and pays the deferred CGT when they eventually sell. Both donor and donee must elect jointly.

Last updated: 10 June 2026Last reviewed: 10 June 2026How we verify

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Gift Holdover Relief (also called holdover relief or gift relief) is a CGT deferral mechanism available under two separate provisions of TCGA 1992. Section 165 holdover: applies to gifts of business assets -- broadly, shares in a trading company (or holding company of a trading group) that is unquoted, and assets used in a business carried on by the donor or by their personal company (e.g. land, plant, goodwill). The relief is also available on gifts to certain trusts. Section 260 holdover: applies where the gift is an immediately chargeable transfer for Inheritance Tax purposes (i.e. a gift into a discretionary trust or certain other trusts, but not a potentially exempt transfer to an individual). The mechanism: when you make a qualifying gift, instead of paying CGT on the gain at the point of gift, both you and the recipient jointly elect to hold over the gain. The recipient takes the asset with a base cost equal to your original acquisition cost (or lower if you only partially hold over), rather than the market value at the date of gift. When the recipient later sells the asset, they pay CGT on the combined gain (your original gain plus any further growth). Importantly, if the recipient sells while a basic rate taxpayer the effective rate may be lower than if you had paid at your higher rate. Practical uses: passing a trading business or shares to a child or other family member; settling assets into a trust as part of IHT planning. Limits and restrictions: holdover relief is not available for gifts to connected persons who are not in business together unless the gift is of shares in a qualifying trading company; it is not available for purely investment assets under s.165 (a rental property portfolio would not qualify under s.165, though it might under s.260 if settled into trust); and if the asset has been the donor's main residence, principal private residence relief should be considered first. The holdover election must be made on form HS295 submitted with the Self Assessment return for the year of gift.