Commentary

C3.1602 Holdover relief for gifts of non-business assets—computation of held-over gain

Capital gains tax
Capital gains tax | Commentary

C3.1602 Holdover relief for gifts of non-business assets—computation of held-over gain

Capital gains tax | Commentary

C3.1602 Holdover relief for gifts of non-business assets—computation of held-over gain

If no consideration is received for the disposal, or the consideration received is less than the transferor's allowable expenditure under TCGA 1992, s 38 (see C2.201–C2.207), the full amount of the gain which would otherwise have been chargeable may be held over; the effect of this is that no chargeable gain arises at the time of the disposal, but the amount of the gain which would have been chargeable but for the relief is deducted from the transferee's base cost1.

Example 1

Mr A bought 1,000 ordinary shares in Z Ltd at a cost of £5,000 including incidental expenses. Ten years later, when the shares were worth £10,000, Mr A settled them on a discretionary trust for the benefit of his daughter, Mrs B. Mr A claimed holdover relief under TCGA 1992, s 260 for this gift. The trustees subsequently sold the shares for £15,000 net of incidental expenses.

The capital gains tax position is as follows:

Mr A

Deemed consideration for disposal£10,000
Deduct: Acquisition cost(5,000)
Chargeable gain5,000
Deduct: Gifts relief: held-over gain(5,000)
Gain immediately chargeablenil

Trustees

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