Key takeaways
- From 6 April 2027, a change to the Capital Gains Tax gift holdover relief restriction applies to disposals of shares in trading companies.
- Assets in the substantial shareholding exemption or the intangible fixed assets regime, such as goodwill from April 2002, now count in the formula.
- It affects gifts of shares in a personal trading company, or unlisted shares, where the company or group also holds non-trading assets.
- Relief becomes more generous where the extra assets counted are mainly trading assets, and less generous where they are mainly non-trading.
- There is no effect where the company or group holds only trading assets, and HMRC expects a negligible Exchequer impact.
A change to Capital Gains Tax gift holdover relief takes effect for disposals made on or after 6 April 2027. It alters how the relief is restricted when a gifted company also holds assets that are not used in its trade. HMRC says the measure restores how the restriction formula worked before the substantial shareholding exemption and the intangible fixed assets regime were introduced. It was announced at Budget 2025, and draft legislation appeared at Tax Update Day 2026.
What the rule change does
Gift holdover relief lets someone who gives away business assets postpone the gain. When the assets are shares in a company that also owns non-business assets, the relief is reduced by a formula.
The new rule changes which company assets count as “chargeable assets” in that formula. Assets that would be chargeable but for being within the substantial shareholding exemption (SSE), or that fall within the intangible fixed assets (IFA) regime, are now included. The draft legislation adds that the IFA test looks at whether a gain on realising the asset would be a chargeable realisation gain. Goodwill created or acquired on or after 1 April 2002 is the HMRC example of an IFA.
Who is affected
The measure applies to individuals who gift shares or securities of:
- a trading company, or
- the holding company of a trading group
It covers cases where the company is the transferor’s personal company, or where the shares or securities are unlisted. HMRC says this typically happens as part of succession planning. The population is expected to be a small subset of the Capital Gains Tax population.
There is no effect where the company or group’s assets consist only of trading assets.
Who gains and who loses
The direction of travel depends on what the extra assets are.
| What the newly counted assets mainly are | Effect on holdover relief |
|---|---|
| Trading assets | Relief becomes more generous |
| Non-trading assets | Relief becomes less generous |
| No non-trading assets in the company or group | No change |
The effect is therefore specific to each company. A business with large goodwill and few investments is likely to see a different result from one that holds substantial shareholdings or surplus investments.
Timing and legislation
The measure has effect for disposals made on or after 6 April 2027. The amendment is to paragraph 7 of Schedule 7 to the Taxation of Chargeable Gains Act 1992, which is the paragraph that reduces held-over gains on disposals of shares. Related provisions are in sections 165 to 169G of the Act.
HMRC expects a negligible effect on the Exchequer and no change to its processes or how customers engage with it. The note names the Capital Gains Tax policy team (cgtbudget@hmrc.gov.uk) for questions.
What advisers should do
- Identify planned gifts of shares. Look for family succession plans, gifts to trusts and any transfers of a personal company.
- List the company’s non-trading assets. Include surplus cash, investments and any shareholdings that may sit within the SSE.
- List intangibles. Check for goodwill or other assets in the IFA regime.
- Run the restriction both ways. Compare a gift before 6 April 2027 with one after, using the new definition of chargeable assets.
- Document the position. Keep the working papers that support the relief computation.
The wider Budget changes to Capital Gains Tax relief are covered in our posts on the BADR lifetime limit and Founders’ Relief. For the basics, read our guide to gift holdover relief.
Frequently asked questions
When does the gift holdover relief change start?
It applies to disposals made on or after 6 April 2027.
Does the change reduce gift holdover relief for all business owners?
No. It has no effect where the company or group holds only trading assets. Where it holds other assets, the relief can go up or down.
What counts as an intangible fixed asset?
HMRC’s example is goodwill created or acquired on or after 1 April 2002. Intangible fixed assets are the assets within the corporation tax intangible fixed assets regime.
Was this change a surprise?
No. It was announced at Budget 2025 and draft legislation was published at Tax Update Day 2026.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 1 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.