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Holdover relief on non-business assets

Using annual IHT gift allowance to claim holdover relief on non-business asset

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Hello,

An elderly client who has held shares in one publicly listed company company for several decades, leading to a large paper gain, far in excess of CGT AEA. Is it possible to claim holdover relief if client were to gift the shares to the value of £3000 (annual IHT exemption) to their grandchild? This is not a PET, so I am not sure whether it would work.

Thank you in advance

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By Tax Dragon
14th Sep 2021 14:15

I would guess shares to the value of £3,000 would be covered by CGT AEA, so maybe it doesn't matter that it doesn't work.

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Replying to Tax Dragon:
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By djg373
14th Sep 2021 15:48

Hi Tax Dragon. Unfortunately the PLC is likely to be subject to an all cash takeover, so the AEA will be used for this. I am looking for ways of reducing the CGT, as could use grandchild’s AEA if holdover relief available.

The CGT payable is very substantial so I am trying to examine any and every opportunity to reduce/ defer. Other than gifting to spouse, and perhaps this approach I am drawing blanks. Given her age, an EIS type investment would be manifestly unsuitable.

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By Justin Bryant
14th Sep 2021 14:40

I'm not sure why it's not a PET and there's an old trick whereby the shares can be gifted in & out of a trust to get the CGT holdover relief.

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Replying to Justin Bryant:
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By Tax Dragon
14th Sep 2021 15:15

Because it would not be a chargeable transfer apart from s3A.

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