Gift relief — restrictions

Produced by Tolley

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Gift relief - restrictions
  • Restrictions for non business assets
  • Chargeable assets and chargeable business assets
  • Restriction for sales at undervalue
  • Partial business use
  • More than one restriction

Gift relief - restrictions

In certain situations, gift relief is available to defer capital gains on gifts of business assets, which would otherwise be immediately chargeable to CGT.

This guidance covers restrictions on gift relief where a donor gives away shares of a company holding non business assets or where only part of an asset or holding period was used for business purposes.

For an introduction to gift relief, including the definition of business assets, and information about making claims and the possibility of paying tax in instalments, see the Gift relief guidance note.

Restrictions for non business assets

Gift relief will not always be available to completely eliminate the capital gain. Sometimes gift relief is restricted. The most common example when full gift relief will not be available is where a donor gives away shares in his personal company, and that company holds non-business assets.

If this is the case, the amount of the gain which qualifies for gift relief is restricted by the following fraction:


  1. CBA is the market value of the company’s chargeable business assets

  2. CA is the market value of the company’s chargeable assets

TCGA 1992, Sch 7, para 7(1)

This restriction only applies where a donor and donee are making gift relief claims under TCGA 1992, s 165. Where a donor is giv

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