The UK Government published draft legislation that changes how HM Revenue and Customs (HMRC) calculates Capital Gains Tax (CGT) Gift Holdover Relief when you gift business shares.
Released on 23 June 2026, this measure updates Section 165 of the Taxation of Chargeable Gains Act 1992. The Government wants to remove calculation errors created by later tax rules for intangible assets and shareholdings.
If you plan to gift company shares or pass your business to family, these proposed rules directly affect how much capital gain you can defer.
What Is Changing with CGT Holdover Relief?
Gift Holdover Relief lets business owners defer paying tax gains when gifting qualifying business assets or shares.
However, HMRC restricts your relief if your trading company also owns non-trading assets, such as investment properties. The current formula determines your relief by looking at the company’s total chargeable assets.
The main problem is that current rules ignore assets covered by the Intangible Fixed Assets regime and the Substantial Shareholding Exemption. Because lawmakers introduced these tax regimes after the original holdover rules, the formula produces distorted tax results. Following an initial announcement at Budget 2025, the Government is now modernising this formula.
The draft legislation adds these missing assets into the formula, which restores the original balance of the tax calculation.
Who Could Be Affected?
This update affects individuals who gift shares or securities in a trading company or a trading group’s holding company.
It applies if you gift unlisted shares or equity in your personal company. Therefore, family business owners and company directors planning succession transfers must pay close attention to this change.
Companies that only own assets used for trading will see no impact from this rule change.
When Will the New Rules Apply?
The proposed changes will take effect for share disposals made on or after 6 April 2027. The existing calculation rules continue to apply until that date.
Keep in mind that this measure remains draft legislation and is not yet final law.
However, timing your share transfer is vital. Completing a transfer today under current rules could produce a significantly different tax outcome compared to transferring shares after April 2027.
What Should Business Owners Do Now?
You should review your tax planning position before completing any share transfer.
First, identify which company assets your business uses for trading. Second, check if your company holds qualifying intangible assets or subsidiary shareholdings. Finally, calculate how current and proposed rules affect your available relief.
You do not need to delay every planned transfer until April 2027. Commercial priorities, family needs, and tax circumstances differ for every business owner, which is why tailored succession planning matters when timing a share gift.
At Lanop, our tax advisers help business owners evaluate CGT exposure, handle asset transfers, and structure succession plans effectively. Contact our team today to review your share structure and choose the best timing for your business succession.
