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‘Hold-Over’ Relief
‘Hold-over’ relief is a way of deferring payment of capital gains tax (CGT) on certain assets, including land and buildings used in a business, until the new owner of the asset sells. 

The donee, in effect, takes over the original cost of the asset and may eventually have to pay CGT on both the gain incurred from the date of gift plus the gain ‘held over’. 

HMRC have produced Help Sheet 295 ‘Relief of gifts and similar transactions’ that details the procedure. A claim form needs to be signed and submitted. The Help Sheet can be seen at:
www.gov.uk/government/publications/relief-for-gifts-and-similar-transactions-hs295-self-assessment-helpsheet (updated 2016).

Example:
Judy owns a second home which shows a significant gain. She gives the cottage to her husband Jim.

This is treated as a ‘no gain/no loss’ disposal between them as they are married. Jim is treated as acquiring the cottage for the price that Judy paid originally (so preserving the gain in his hands), as from the date of the inter-spouse disposal. 

Jim manages the property as a qualifying furnished holiday let and after a year gives the property to their adult daughter, Louise, claiming ‘hold-over’ relief so that Louise takes over her mother’s historic base cost. 

Louise subsequently occupies the property as her only or main residence such that when the property is sold Principal Private Residence relief will reduce the gain chargeable.  

This tip was first printed in Property Tax Insider in December 2016.

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