Reshma Johar outlines the circumstances when a claim for business asset hold-over relief could alleviate an immediate charge to CGT on the transfer of a business asset.
Capital gains tax (CGT) arising from a transfer of a business asset (or agricultural property) which was either an outright gift or sale at undervalue, could be reduced either partly or entirely by a holdover relief claim.
The relief (sometimes called ‘gift relief’) can be claimed on qualifying transfers on a non-arm’s length basis, where the disposal has been made on non-commercial terms. This can also include transfers between connected persons where the consideration falls below the market value of the asset (TCGA 1992, s 165, Sch 7).
What is a ‘business asset’?
If the disposal is an asset (or an interest in an asset), it needs to have been used by the transferor for the purpose of their