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Where an asset is gifted to another person, the deemed sales proceeds are equal to the market value of the asset at the date of the gift¹, which may give rise to a gain in the hands of the transferor with no proceeds with which to pay the tax due. However, where the gift is of a business asset, the business asset gift relief rules allow the transferor's gain to be deferred (or held-over) and the transferee's base cost to be reduced by the amount of the gain held-over².

For the conditions for the business asset gift relief (also known as holdover relief for gifts of business assets), including the assets that fall within the definition of business assets, see C3.502. For the calculation of the relief, see C3.503.

This is a very generous relief and there are anti-avoidance provisions to prevent it from being used in a way that was not intended by Parliament, usually to stop the deferred gain being taken out of the scope