Produced by Tolley in association with Paul Davies at DWF
  • 19 Oct 2021 23:10

The following Trusts and Inheritance Tax guidance note Produced by Tolley in association with Paul Davies at DWF provides comprehensive and up to date tax information covering:

  • Hold-over relief
  • Business hold-over relief
  • General hold-over relief
  • Making and withdrawing a claim
  • Restriction on relief
  • Gifts to settlor-interested trusts
  • Transfers to non-residents and clawback of relief
  • Transfer of UK residential property to non-residents

Hold-over relief

‘Hold-over’ relief allows for the deferral of a gain that would otherwise arise in relation to a disposal. No capital gains tax (CGT) is due in respect of the disposal, but the base cost of the asset for the transferee for the purpose of a future disposal is reduced by an amount equal to the gain that would otherwise have arisen.

Hold-over relief can be of two types:

  1. ‘business’ hold-over relief on disposals of certain types of business assets

  2. ‘general’ hold-over relief on certain disposals that give rise to an IHT charge (plus some other disposals by trustees)

The relief is optional and has to be claimed.

If both types of hold-over relief are available in relation to a disposal, then general hold-over relief must be claimed instead of business hold-over relief.

Hold-over relief is available to trustees but not to personal representatives. When personal representatives transfer the assets of the estate to the persons entitled to them, no gain will arise in any event, and the legatees will receive the asset with a base cost equal to that at death.

Business hold-over relief

The assets that qualify for business hold-over relief are:

  1. assets or interests in an asset that is used for the purpose of a trade profession or vocation by the trustees, or by a beneficiary who has an interest in possession in the asset

  2. shares or securities of a trading company or the holding company of a trading group, if either:

    1. the shares are unquoted, or

    2. the trustees hold at least 25% of the voting rights of the company concerned

  3. agricultural properties that qualify for relief from IHT but is not otherwise business property

The relief is discussed further in the Business asset gift relief guidance note in the Personal Tax module, although you should be aware that, whilst an individual can claim relief in respect of assets owned by him and used by his ‘personal company’, there is no equivalent relief for trustees.

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information


Popular Articles

Reduced VAT rate ― supplies of fuel and power

The supply of fuel and power is treated as a supply of goods for VAT purposes. Supplies are fuel and power are normally liable to VAT at the standard rate. However, providing certain conditions are satisfied, it is possible for suppliers to charge the reduced rate of VAT on certain supplies of fuel

22 Dec 2021 18:49 | Produced by Tolley Read more Read more

Exemption ― supplies of stamps and philatelic items

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s

28 Oct 2021 11:21 | Produced by Tolley Read more Read more

VAT fuel scale charges

VAT fuel scale chargesWhat are fuel scale charges?The VAT fuel scale charge is a simplified method that can be used by a business that funds both business and private mileage costs for employees to account for any output tax due on the private use of the vehicle. The charge was introduced to

19 Oct 2021 11:21 | Produced by Tolley Read more Read more