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Calculating holdover relief on gifts of business assets

The holdover relief for business assets applies to disposals otherwise than by way of bargains at arm's length¹, so it is available in respect of both gifts and transfers at undervalue.

Subject to the restrictions described in C3.504, if no consideration is received for the disposal, or the consideration received is less than the transferor's allowable expenditure² (see C2.201), the full amount of the gain that would otherwise have been chargeable may be held over. In other words, no chargeable gain arises at the time of the disposal, but the amount of the gain that would have been chargeable but for the relief (ie the held-over gain) is deducted from the transferee's base cost³. The held-over gain is therefore automatically brought into the capital gains computation on any subsequent disposal of the asset by the transferee.

If the consideration received exceeds the transferor's allowable expenditure on the asset, the amount of the gain that may be held over