Why is gifts holdover relief necessary?
The gift of a chargeable asset, or sale at less than an arm’s length price, is normally treated for CGT purposes as a disposal at market value (although inter-spouse transfers are normally exempt). Without holdover relief, a gift or sale at undervalue could result in a CGT liability, with little or no disposal proceeds from which to pay it. • Who can claim the relief? Gifts holdover relief is available to individuals, or to the trustees of a settlement in some cases. The held-over gain is treated as reducing the base cost of the asset in the hands of the recipient. However, gifts holdover relief is generally not available unless the recipient is resident and ordinarily resident in the UK. • Which assets qualify for gifts holdover relief? The relief applies to business assets, broadly comprising the following: • Assets used for the purposes of a business carried on by the donor, his personal company or a group subsidiary of his personal company. A ‘personal company’ is a trading company
