Comparison · Tax · 2026/27
Gift Hold-Over Relief vs an Outright Gift (CGT) UK 2026/27
Gifting a qualifying business asset or trading company shares can trigger an immediate Capital Gains Tax bill for the giver — unless Gift Hold-Over Relief is jointly claimed to defer the gain onto the recipient instead. Here is how the two routes compare for 2026/27.
TL;DR - 30-Second Summary
- - Hold-over relief: defers CGT on the gift; recipient inherits the original base cost and pays tax on the full gain later
- - Outright gift, no relief: giver faces an immediate CGT bill on the market-value gain
- - Joint election required (except gifts into trust), usually within 4 years of the tax year of the gift
Practical Takeaways
Claim hold-over relief if...
- - The asset qualifies (business assets, unlisted trading company shares, agricultural property, gifts into trust)
- - You cannot afford or do not want an immediate CGT bill
- - Both you and the recipient are willing to make the joint election
An outright gift may apply if...
- - The asset does not qualify for hold-over relief (e.g. standard investment property)
- - You want to realise the gain now, perhaps to use your CGT annual exemption
- - The recipient does not want to inherit a large deferred gain
Frequently Asked Questions
What is Gift Hold-Over Relief?
Gift Hold-Over Relief lets you gift certain business assets or shares in a trading company (and some other qualifying assets) without paying Capital Gains Tax at the time of the gift. Instead, the gain is "held over" and passed to the recipient, who inherits your original base cost and will pay CGT on the full gain when they eventually dispose of the asset.
What happens with an outright gift with no relief claimed?
Without hold-over relief, gifting an asset that has risen in value is normally treated as a disposal at market value for Capital Gains Tax purposes, meaning the giver can face an immediate CGT bill on the gain — even though no cash has changed hands — at rates of 18% or 24% for 2026/27 depending on the asset and the giver's tax band.
Which assets qualify for hold-over relief?
Broadly: assets used in the giver's trade, shares in a trading company that is not listed (or listed but the giver has a controlling interest), agricultural property, and gifts into or out of certain trusts. Gifts of investment property like a standard buy-to-let generally do NOT qualify for hold-over relief.
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Do both parties need to claim hold-over relief?
Yes — hold-over relief requires a joint election by the giver and the recipient (except for gifts into trust, where only the giver needs to elect), submitted to HMRC, usually within 4 years of the end of the tax year of the gift.
Does hold-over relief avoid CGT altogether?
No — it defers the tax, it does not cancel it. The recipient inherits the original (lower) base cost, so when they eventually sell the asset, they pay CGT on the whole gain built up since the original owner acquired it, not just the growth during their own ownership.
Why would someone choose an outright gift without claiming relief?
This is rare and usually happens only when hold-over relief is unavailable (e.g. gifting a non-qualifying investment asset) or where the giver wants to use up their own £3,000 CGT annual exemption or realise a loss for tax planning reasons rather than pass the full deferred gain to the recipient.
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Disclaimer: This is educational information, not tax advice. Gift Hold-Over Relief qualifying conditions are detailed and asset-specific — see gov.uk/capital-gains-tax-gifts and consult a tax adviser before gifting significant assets.
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