Hold-over relief

By Tolley in association with Paul Davies at DWF

The following Trusts and Inheritance Tax guidance note 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

This document discusses the types of reliefs available, procedure of withdrawing a claim, restriction on relief. This also covers rules on transfers to non-residents and claw back of 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:

  • ‘business’ hold-over relief on disposals of certain types of business assets (TCGA 1992, s 165)
  • ‘general’ hold-over relief on certain disposals that give rise to an IHT charge (plus some other disposals by trustees) (TCGA 1992, s 260)

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.

TCGA 1992, s 165(3)(d)

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.

TCGA 1992, s 62
Business hold-over relief

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

  • 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
  • shares or securities of a trading company or the holding company of a trading group, if either:
    • the shares are unquoted, or

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