UK Gift Hold-Over Relief for Business Shares 2027

The UK government has published draft legislation to change how Gift Hold-Over Relief is restricted when an individual gives qualifying business shares and the company or group also holds assets that are not used in its trade. The proposed change applies to disposals made on or after 6 April 2027.

The proposal is narrower than a new general relief for all gifts. It changes the asset calculation used to limit the gain that can be held over when qualifying shares are transferred. The ordinary conditions for Gift Hold-Over Relief, the need to make a claim and the recipient's deferred tax position still matter.

This is a published proposal and draft legislation, not a substitute for checking the enacted rules. For a current-law introduction, read HMRC's Gift Hold-Over Relief guidance and the HS295 helpsheet.

What is Gift Hold-Over Relief?

Gift Hold-Over Relief can defer a chargeable gain when qualifying business assets or shares are given away, or in some cases transferred for less than market value. The transferor generally does not pay CGT on the held-over gain at the time of the gift. Instead, the recipient takes a reduced base cost and may pay CGT on the deferred gain when they later dispose of the asset.

The relief is a deferral mechanism, not necessarily a permanent elimination of tax. The transferor and recipient usually need to make a joint claim for a gift of business assets or shares, and the facts must satisfy the relevant statutory conditions.

What is changing from 6 April 2027?

The published measure changes the formula used for a gift of qualifying shares where the company or group has assets that are not used for its trade. Under the current restriction, the calculation can be affected by assets that would not normally produce a chargeable gain because they fall within the Substantial Shareholding Exemption or the corporation-tax intangible fixed-assets regime.

The draft amendment treats those assets as chargeable assets for the purpose of the restriction formula. The stated policy objective is to restore the way the calculation operated before those regimes created distortions. The effect can be more generous where the additional assets are mainly trading assets, and less generous where they are mainly non-trading assets.

The change does not replace the full computation. A professional reviewing a transfer still needs to identify the relevant company or group assets, determine how the statutory formula applies and check the consideration, ownership and trading facts.

Who may be affected?

The measure is aimed at individuals giving shares or securities in:

• their personal company; or
• an unlisted trading company or the holding company of a trading group, where the relevant statutory conditions are met.

It is particularly relevant to succession planning, family transfers and gifts of shares in an owner-managed business. It may have no practical effect where the relevant company or group consists only of trading assets, because the specific non-trading-asset restriction is the part being adjusted.

It is not a general rule for gifts of investment portfolios, ordinary listed shares, cash or assets held personally outside a qualifying business. Separate CGT reliefs and Inheritance Tax rules may need to be considered, but they should not be assumed to produce the same result.

Does this make a gift of shares tax-free?

No. Several separate questions remain:

1. Is the transfer a disposal to which market-value rules apply?
2. Are the shares or securities within a qualifying business-asset category?
3. Does the transferor meet the personal-company, trading-company or group conditions?
4. Is a valid claim required, and has it been made by the right parties?
5. What gain is held over and what base cost does the recipient inherit?
6. Could CGT, Inheritance Tax, stamp taxes, trust rules or company-law issues apply separately?

The 2027 measure addresses only part of the gain-restriction calculation. It should not be described as a blanket exemption for a family company transfer.

Current law versus the proposed 2027 position

How the held-over gain affects the recipient

When relief is available, the recipient generally receives the asset with a reduced base cost. If the transferor's gain is held over, that deferred gain is built into the recipient's future CGT calculation. A later sale can therefore expose the recipient to tax on the original growth as well as any increase after the gift.

The recipient should retain:

• the signed claim and any HMRC correspondence;
• the transfer date and consideration, if any;
• the transferor's acquisition cost and valuation evidence;
• the shareholding, voting and company-group records; and
• the recipient's reduced base-cost calculation.

A gift can also have consequences for the transferor's estate and for the recipient's future planning. CGT hold-over relief does not decide the Inheritance Tax treatment of the transfer.

Why the asset mix matters

The proposed change is a restriction calculation, so the company valuation alone is not enough. Prepare a balance-sheet schedule at the transfer date and classify cash, investments, land, intellectual property, loans, trading premises and shares in subsidiaries. Then identify which assets are used in the trade, which are held as investments and which are connected with the company's working capital. The classification should be supported by accounts, board papers, contracts and evidence of how the assets are used; a label such as “cash reserve” does not settle whether the reserve is commercially required or an investment asset.

The share transfer can also involve a group. Trace the ownership chain, subsidiary activities and any intercompany balances before asking how the formula applies. A holding company of a trading group is not automatically treated in the same way as a company that merely owns investments. If the business has recently sold a trading division, bought an investment property or moved surplus cash, the date and commercial reason may matter. Preserve the accounts and transaction history rather than recreating an asset schedule after HMRC asks for it.

Transaction timing and claim controls

Use a transaction timeline with the valuation date, agreement date, completion date, consideration paid, share registration, claim signature and any trust or company approval. The proposed commencement is expressed by reference to disposals made on or after 6 April 2027, so the legal disposal date should be checked against the final legislation instead of assuming that an announcement date or Companies House filing date controls. A transfer split over several completions may need to be analysed as more than one disposal.

Before completion, calculate at least two cases: ordinary current-law treatment and the proposed post-5 April 2027 treatment. Show the gain, any restriction, the amount held over, the recipient's resulting base cost and the tax that could arise on a later sale. This is a planning comparison, not evidence that the draft rule has been enacted. After completion, both parties should retain the signed claim, valuation, share certificate or register evidence and the computation that links the transfer consideration to the base-cost adjustment.

Keep other taxes separate

Gift Hold-Over Relief is a CGT mechanism. It does not automatically remove a possible Inheritance Tax lifetime-transfer issue, create a stamp-duty exemption, approve a company buyback, or resolve a trust's tax position. A gift to an individual, a gift to trustees and a transfer for consideration can have different consequences. The donor should also consider whether a gift with reservation, connected-party transaction, debt release or benefit retained in the company changes the analysis. Check the recipient's residence and future disposal position as well as the donor's gain.

If the transfer is part of a sale, management buyout or reorganisation, do not describe the whole arrangement as a gift merely because some shares are transferred below market value. Test each step, the commercial purpose and the consideration. A valuation that is suitable for negotiations may not be sufficient for tax records, especially for minority shares, restrictions, preference rights or a company with several classes of shares.

Preparation checklist for a 2027 business-share gift

Frequently Asked Questions

This guide reflects HMRC and HM Treasury material available on 20 September 2026. The draft legislation, final Finance Act and HMRC guidance should be checked again before relying on the proposed 2027 treatment.

Official sources

• HMRC: Capital Gains Tax relief for gifts of business assets
• HMRC: Draft legislation for gifts of business assets
• GOV.UK: Gift Hold-Over Relief
• HMRC: HS295 Relief for gifts and similar transactions (2026)
• HMRC: Tax update 2026