{"id":22193,"date":"2022-12-01T18:33:52","date_gmt":"2022-12-01T18:33:52","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=22193"},"modified":"2024-03-26T17:29:26","modified_gmt":"2024-03-26T17:29:26","slug":"whats-the-hold-over-relief-on-gifts","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/investor-capital-gains-tax-returns\/whats-the-hold-over-relief-on-gifts\/","title":{"rendered":"What&#8217;s the hold-over relief on gifts?"},"content":{"rendered":"\n<p>If your business uses, creates or benefits from any items of value, (i.e, a salon will most likely own plenty of styling chairs), you may be able to gift these items without having to pay capital gains tax. This is called the hold-over relief. Read on to find out more.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What do you mean by business assets?&nbsp;<\/h2>\n\n\n\n<p>If your business holds something of value such as cash, raw materials or even equipment, this is called a business asset. Here are some examples of business assets:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Cash and cash equivalents (cheques, bank deposits etc.)<\/li>\n\n\n\n<li>Marketable <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/securities\/\" target=\"_blank\" rel=\"noreferrer noopener\">securities<\/a> (financial assets that can easily be converted into cash such as <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/bitcoin\/\" target=\"_blank\" rel=\"noreferrer noopener\">Bitcoin<\/a>)<\/li>\n\n\n\n<li>Trademarks e.g the arched yellow \u2018m\u2019 is a trademark of McDonald&#8217;s<\/li>\n\n\n\n<li>Stock or equipment from your business, i.e. desktops or telephones<\/li>\n\n\n\n<li>Inventory (a complete list of goods and materials for sale)<\/li>\n<\/ul>\n\n\n\n<p>Only a <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/sole-trader\/\" target=\"_blank\" rel=\"noreferrer noopener\">sole trader<\/a> or a business partner will have power to give away or sell business assets. There may be exceptions to this (i.e. you\u2019re the director of the company). <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">OK, now what is capital gains tax?<\/h2>\n\n\n\n<p><a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/capital-gains-tax-cgt\/\" target=\"_blank\" rel=\"noreferrer noopener\">Capital gains tax<\/a> (CGT) is a tax you pay when you sell an asset for a profit. You owe it when you make a profit more than \u00a33,000 in the 2024\/25 tax year. So if you sell an asset and cash in a profit of over \u00a33,000 which is the CGT threshold, you\u2019ll have to pay capital gains tax. You only pay CGT on the amount that is over the threshold.<\/p>\n\n\n\n<p>You should also file a tax return, however, if you sell your asset for more than <strong>four times<\/strong> the CGT allowance, even if your profit is less than \u00a33,000.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"embed-container\"><iframe loading=\"lazy\" title=\"Tax in 10(ish) seconds - what is Capital Gains Tax?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/ZUdtnBFew8o?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p>Now you might think you\u2019re automatically off the CGT hook if you\u2019re not selling for profit. But not exactly.<\/p>\n\n\n\n<p>Capital gains tax may still apply even if you gift or sell an asset for less. Here\u2019s how it works:<\/p>\n\n\n\n<p>If the current value of the asset you\u2019re selling is more than the price that you bought it for, this will also be considered a taxable gain. So you\u2019ll be liable for capital gains tax.<\/p>\n\n\n\n<p>If you want to know the current capital gains tax rates, read about this <a href=\"https:\/\/taxfix.com\/en-uk\/the-tax-basics\/capital-gains-tax-rates\/\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-purple m-align-left\">\n    <div class=\"b-block-body\">\n        <p style=\"text-align: center;\">\ud83c\udf81\u00a0 FYI: If you\u2019re gifting any asset to your spouse or to a registered charity, you won\u2019t need to pay capital gains tax. \ud83c\udf81<\/p>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\">What\u2019s the hold-over relief?<\/h2>\n\n\n\n<p>The hold-over relief means you may not have to pay capital gains tax when gifting an asset.&nbsp;<\/p>\n\n\n\n<p>If you give a business asset away or sell it for less than it\u2019s worth, you may not have to pay CGT on this by claiming a tax relief. It\u2019s called the hold-over relief.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-nude m-align-left\">\n    <div class=\"b-block-body\">\n        <p><strong>Just think of it like this:<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Your best mate wants to get their business started, so you offer them a hand. You gift them machinery. You bought the machinery for \u00a316,000 but it is now worth \u00a333,000. <\/p>\n<p>Although you\u2019ve not made a profit when gifting the machinery, there is still a gain of \u00a317,000. So you\u2019ll still be liable for capital gains tax.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But because you\u2019ve given a valuable business asset away to help your mate, you\u2019ll be able to claim the hold-over relief and not have to pay capital gains tax on this gain.<\/span><\/p>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\">Is the whole transaction tax-free?<\/h2>\n\n\n\n<p>No. Whilst you may not have to pay CGT on the gain, the person you gift to might have to pay up. This will be the case if they decide to sell the asset you\u2019ve gifted them.&nbsp;<\/p>\n\n\n\n<p>For example, if your best mate decides to sell the machinery you\u2019ve gifted them, they\u2019ll have to work out:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The current price of the asset \ud83d\udcb8<\/li>\n\n\n\n<li>The gain once it\u2019s been sold \ud83d\udcc9<\/li>\n<\/ul>\n\n\n\n<p>They\u2019ll have to report this to HMRC <em>and<\/em> take care of the capital gains tax bill. So if anything, it\u2019s actually a capital gains tax deferral.<\/p>\n\n\n\n<p>Additionally, you\u2019ll have to pay capital gains tax if you sell an asset for less than its current value, but for more than what you paid for it. You\u2019ll still be able to claim the hold-over relief but will have to pay capital gains tax on the profit you earned that\u2019s above the CGT threshold.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-blue m-align-left\">\n    <div class=\"b-block-body\">\n        <h4>For example:<\/h4>\n<p>Instead of gifting your mate machinery, you sell it to him but throw in a \u00a34,000 discount. It\u2019s still worth \u00a333,000 although you bought it for \u00a316,000. So you sell it to your friend for \u00a329,000.<\/p>\n<p>Whilst you won\u2019t pay CGT on the full \u00a333,000 value of the asset, you\u2019ll still have to pay tax on the profit earned.<\/p>\n<p>So \ud83e\udd13:<\/p>\n<ul>\n<li>\u00a329,000 \u2013 \u00a316,000 = \u00a313,000<\/li>\n<li>CGT threshold = \u00a33,000 in the 24\/25 tax year<\/li>\n<li>You pay tax on your \u00a310,000 profit<\/li>\n<\/ul>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\">Can I claim the hold-over relief if I\u2019m gifting shares?<\/h2>\n\n\n\n<p>You\u2019ll still be able to claim the hold-over relief if you gift certain <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/shares\/\" target=\"_blank\" rel=\"noreferrer noopener\">shares<\/a> of a company instead of a business asset. As long as the company meets these few requirements:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It cannot be listed on any market where you can buy bonds, stocks, etc.<\/li>\n\n\n\n<li>The shares can\u2019t be in a company you own<\/li>\n\n\n\n<li>The company must (mainly) provide goods or services<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">How do I claim the hold-over relief?<\/h2>\n\n\n\n<p>The hold-over relief needs to be claimed and isn\u2019t an automatic relief.&nbsp;<\/p>\n\n\n\n<p>To do this, you\u2019ll need to fill in the <a href=\"https:\/\/www.gov.uk\/government\/publications\/relief-for-gifts-and-similar-transactions-hs295-self-assessment-helpsheet\" target=\"_blank\" rel=\"noreferrer noopener\">reliefs for gifts and similar transactions helpsheet<\/a>. Both you and the receiver of the gift will have to sign this form.<\/p>\n\n\n\n<p>The final step is sending the form with your Self Assessment tax return.&nbsp;<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-mint m-align-left\">\n    <div class=\"b-block-body\">\n        <p style=\"text-align: center;\">\ud83d\udea8 Before gifting, the business asset(s) must have been used only for your business. But if you used any of the assets partly for your business, you can still claim for a partial CGT exemption. \ud83d\udea8<\/p>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\">Can Taxfix help me claim the hold-over relief?<\/h2>\n\n\n\n<p>You bet! \ud83d\udc81<\/p>\n\n\n\n<p>Our accredited accountants can sort your Self Assessment tax return and claim the hold-over relief for you. Simple!<\/p>\n\n\n\n<p>Find out more about Taxfix\u2019 services <a href=\"https:\/\/taxfix.com\/en-uk\/services\/\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If your business uses, creates or benefits from any items of value, (i.e, a salon will most likely own plenty of styling chairs), you may be able to gift these items without having to pay capital gains tax. This is called the hold-over relief. Read on to find out more. What do you mean by [&hellip;]<\/p>\n","protected":false},"author":30,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[461,458],"tags":[70,419],"class_list":["post-22193","post","type-post","status-publish","format-standard","hentry","category-crypto","category-investor-capital-gains-tax-returns","tag-capital-gains-tax","tag-crypto"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What&#039;s the hold-over relief on gifts? &#8211; Taxfix<\/title>\n<meta name=\"description\" content=\"If your business holds something of value such as cash or raw materials, you may be able to claim the hold-over relief if you gift it.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/taxfix.com\/en-uk\/investor-capital-gains-tax-returns\/whats-the-hold-over-relief-on-gifts\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What&#039;s the hold-over relief on gifts? 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