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Where assets are gifted or subject to disposal at undervalue, the legislation treats the disposal as having taken place for market value proceeds. The transferee’s base cost is the deemed proceeds (ie market value) at the date of the gift, no matter the actual consideration paid.

To mitigate the transferor’s cash flow problem where they have capital gains tax (CGT) to pay but may not have received any consideration, business asset gift relief (also known as gift relief or hold-over relief) can be claimed on the gift of qualifying business assets. Gift relief operates to defer the gain by rolling over the capital gain against the base cost of the asset in the hands of the transferee. Essentially, the relief ensures the transferor’s capital gain is passed to the transferee.

The conditions for claiming business asset gift relief and the mechanics of a claim for full relief are shown in the Business asset gift relief guidance note. It is recommended to read that guidance note before continuing.

This guidance note considers occasions where either