Gift hold-over relief lets someone defer the Capital Gains Tax that would otherwise arise when they give away certain assets, chiefly business assets and gifts into most trusts. Instead of the person making the gift paying tax on the gain, the gain is "held over" and passes to the person receiving the asset, who takes it at a reduced base cost.
The relief sits in the Taxation of Chargeable Gains Act 1992: section 165 covers gifts of business assets, and section 260 covers gifts that are chargeable transfers for inheritance tax, such as gifts into a discretionary trust (HMRC helpsheet HS295, 2026, as at August 2026, subject to change). This guide explains how it works, what qualifies, and how families in England and Wales tend to use it as part of wider estate planning. Figures are current as at August 2026 and are subject to change.
What is gift hold-over relief?
When a person gives an asset away, tax law usually treats the gift as if it were sold at open market value. That can create a chargeable gain and a Capital Gains Tax bill, even though no money has changed hands. Hold-over relief removes that immediate charge for qualifying gifts. The gain is not wiped out. It is deferred and transferred to the recipient, so the tax is effectively postponed until they later dispose of the asset (HMRC Capital Gains Manual CG66880, as at August 2026, subject to change).
The current Capital Gains Tax rates are 18% within the basic rate income band and 24% above it, with an annual exempt amount of £3,000 for individuals in the 2026 to 2027 tax year (gov.uk, as at August 2026, subject to change). Hold-over relief is one of the reliefs that can defer a charge at those rates on a qualifying gift.
How it works: the held-over gain
The mechanism is a swap. The person making the gift avoids a current tax bill, and the person receiving the asset accepts a lower base cost for their own future calculation. Their acquisition cost is the market value at the date of the gift, reduced by the held-over gain (HS295, 2026, as at August 2026, subject to change).
Hold-over relief moves the gain, it does not remove it. The tax follows the asset to the next owner.
| Simplified illustration | Figure |
|---|---|
| Market value of gifted shares | £100,000 |
| Original cost to the person giving | £40,000 |
| Gain that would normally be taxed | £60,000 |
| Gain held over (deferred) | £60,000 |
| Recipient's base cost going forward | £40,000 |
Illustration only, based on the method in HS295, 2026. Real cases involve valuations, exemptions and other reliefs. As at August 2026, subject to change.
What qualifies for hold-over relief?
Not every gift qualifies. The relief is aimed at business assets and at gifts that already carry an inheritance tax charge. Broadly, the qualifying categories are set out below.
| Route | What can qualify |
|---|---|
| Section 165 (business assets) | Assets used in a trade, profession or vocation carried on by the individual or their personal company; unlisted shares in a trading company (the Alternative Investment Market counts as unlisted); shares in a personal trading company where you hold at least 5% of the voting rights; and agricultural property. |
| Section 260 (chargeable transfers) | Gifts that are immediately chargeable transfers for inheritance tax and not potentially exempt transfers, most commonly gifts into a discretionary trust. Where section 260 applies it takes priority over section 165. |
Source: HMRC CG66884 and HS295, 2026, as at August 2026, subject to change.
How to claim hold-over relief
Hold-over relief is not automatic. It has to be claimed, using the claim form that accompanies helpsheet HS295, which is then submitted with a Self Assessment tax return, including as a scanned PDF where the return is filed online (HS295, 2026, as at August 2026, subject to change).
- Who signs. The claim is normally made jointly by the person giving the asset and the person receiving it. Where the gift is to the trustees of a settlement, the person making the gift claims alone (HS295, 2026).
- Time limit. A claim must generally be made within four years from the end of the tax year in which the gift took place (HMRC CG66889, as at August 2026, subject to change).
- Valuations. For unlisted shares or land it can be possible to defer agreeing the value under Statement of Practice 8 (1992) where there is no Capital Gains Tax to pay on the gift itself (gov.uk SP8/92, as at August 2026, subject to change).
How it connects to inheritance tax
Hold-over relief deals with Capital Gains Tax, but it rarely sits on its own. A gift can trigger Capital Gains Tax now and still count for inheritance tax later. Outright gifts to individuals are usually potentially exempt transfers, which fall outside inheritance tax if the person survives seven years (gov.uk, gifts and the 7 year rule, as at August 2026, subject to change). Gifts into most trusts are chargeable lifetime transfers instead, and it is those transfers that open the door to section 260 relief. This is why gifts of a family business or of assets into trust are often reviewed for both taxes at the same time, alongside the standard inheritance tax thresholds such as the £325,000 nil-rate band (gov.uk, as at August 2026, subject to change). You can read more in our guide to inheritance tax in England and Wales and how gifts fit into wider estate planning.
What to watch out for
The relief has limits and conditions, and it can be lost. The main points that commonly catch people out are worth knowing before any gift is made.
- Non-UK resident recipients. Hold-over relief under section 165 is generally not available where the person receiving the asset is not resident in the UK, aside from certain interests in UK land (HS295, 2026, as at August 2026, subject to change).
- Settlor-interested trusts. Section 260 relief is not available on a gift into a settlement in which the person making the gift, or their spouse or civil partner, can benefit (HS295, 2026).
- Emigration clawback. If the recipient becomes non-UK resident within six years and still holds the asset, the held-over gain can be brought back into charge (HS295, 2026, as at August 2026, subject to change).
Scotland and Northern Ireland
Capital Gains Tax and hold-over relief are UK-wide, so the relief works the same way across Scotland, Northern Ireland, England and Wales. What differs is the surrounding law. Scotland has its own rules of succession and uses different terms for trusts and estates, and the will and probate framework in Northern Ireland is separate from that in England and Wales. Where a gift or trust touches more than one jurisdiction, it can be worth taking advice in each.
Frequently asked questions
What is gift hold-over relief in simple terms?
It is a Capital Gains Tax relief that lets a person give away a qualifying asset without paying tax on the gain straight away. The gain is held over and passes to the person receiving the asset, who takes it at a lower base cost, so the tax is deferred until they later dispose of it (HMRC CG66880, as at August 2026, subject to change).
Which assets qualify for hold-over relief?
Broadly, business assets used in a trade, unlisted trading company shares, shares in a personal trading company where the giver holds at least 5% of the voting rights, and agricultural property under section 165, plus gifts that are chargeable transfers for inheritance tax, such as gifts into most trusts, under section 260 (HMRC CG66884, as at August 2026, subject to change).
How do you claim gift hold-over relief?
By completing the claim form that comes with HMRC helpsheet HS295 and submitting it with a Self Assessment tax return. The claim is usually made jointly by the person giving and the person receiving, except for gifts to trustees, where the giver claims alone (HS295, 2026, as at August 2026, subject to change).
Is there a time limit to claim?
Yes. A claim must generally be made within four years from the end of the tax year in which the gift took place (HMRC CG66889, as at August 2026, subject to change).
Does hold-over relief cancel the tax or just delay it?
It delays it. The gain is transferred to the person receiving the asset as a reduced base cost, so Capital Gains Tax can arise when they eventually dispose of it. The current rates are 18% and 24%, with a £3,000 annual exempt amount for 2026 to 2027 (gov.uk, as at August 2026, subject to change).
Can I claim hold-over relief on a gift to my children?
An outright gift of cash or an ordinary asset to a child is not usually a qualifying transfer on its own. Hold-over relief generally applies where the asset is a qualifying business asset, or where the gift is a chargeable transfer for inheritance tax, such as a gift into trust. Whether a particular gift qualifies depends on the asset and the structure, so this is general information rather than advice on any one gift (HS295, 2026, as at August 2026, subject to change).