CGT—hold-over relief for trusts and individuals
Produced in partnership with Paul Davies of Clarke Willmott

The following Private Client practice note produced in partnership with Paul Davies of Clarke Willmott provides comprehensive and up to date legal information covering:

  • CGT—hold-over relief for trusts and individuals
  • Business hold-over relief under TCGA 1992, s 165
  • Types of assets on which the relief is available
  • Disposals by trustees
  • Requirements as to the residence of the transferee
  • Further points
  • Hold-over relief under TCGA 1992, s 260
  • Availability of hold-over relief where there is no IHT charge
  • Requirements as to the residence of the transferee
  • Further points
  • More...

CGT—hold-over relief for trusts and individuals

Where an asset is acquired or disposed of otherwise than at arm’s length (ie there is a gift or a transfer at an undervalue), this is a disposal for capital gains tax (CGT) purposes. The chargeable gain on this disposal is calculated on the basis that the deemed consideration is the market value of the asset (whether or not the transferor and transferee are connected). A CGT charge may therefore arise even though there is no cash or actual consideration to pay the CGT. In these circumstances, hold-over relief may be particularly useful.

Hold-over relief allows a chargeable gain arising on certain types of disposal to be deferred. Where the relief is claimed, no CGT is due in respect of the chargeable gain arising on the disposal. Instead, the base cost on the future disposal of the asset by the transferee is reduced by an amount equal to the gain that would otherwise have arisen. Consequently, the CGT that would otherwise had to have been paid is ‘collected’ on the later disposal of the asset by the transferee.

Hold-over relief is available on two types of disposals:

  1. gifts or transfers at undervalue (disposals otherwise than at arm’s length) of certain types of business assets (sometimes called business hold-over relief or business assets hold-over relief)

  2. gifts or transfer at undervalue (disposals otherwise

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