Malcolm Finney explains three often misunderstood concepts of CGT holdover relief.
Capital gains tax (CGT) holdover relief allows for a deferral of a CGT charge arising on a gift of property (or disposal of property at less than market value) or, possibly, outright avoidance (in the case of death at which time a CGT-free uplift occurs); both individuals and trustees are entitled to such relief.
Holdover relief applies in two circumstances; namely, on a gift of certain business assets (TCGA 1992, s 165) or on a gift which is a chargeable transfer (whether or not inheritance tax (IHT) is actually paid) for inheritance tax (IHT) purposes (TCGA 1992 s 260) which, of course, excludes gifts between individuals. In practice, the latter scenario is the more common.
Relief is not available on gifts to non-UK residents (TCGA 1992, s 166) or settlor-interested settlements (TCGA 1992, s 169B).
