CG66885 - Relief for Gifts of Business Assets: Basic Computation
In the simple case of a gift from donor to donee involving no consideration and where none of the restrictions regarding the use, occupation or nature of the asset discussed below apply, hold-over relief is calculated as in the following example:
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On 14 November 2019, Tom gifts the premises he used in his trade to Megan, in exchange for no consideration. At the date of the gift, the premises were worth £750,000. Tom acquired the premises on 7 June 2011 for £500,000.
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In the absence of any relief, Tom바카라 사이트™s gain on the disposal (using its market value, see CG66450) would be £250,000
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Where Tom and Megan jointly claim for hold-over relief to be applied, TCGA92/S165(4) & (7) reduces both Tom바카라 사이트™s gain and Megan바카라 사이트™s acquisition cost by the amount of the chargeable gain which would have accrued in the absence of any relief (being £250,000)
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As a result, no gain is charged on Tom at the time of the gift and Megan바카라 사이트™s acquisition cost is £500,000
In essence, the relief has 바카라 사이트˜held-over바카라 사이트™ a gain that would otherwise have been chargeable on Tom against Megan바카라 사이트™s acquisition cost. If Megan later disposes of the premises, she will compute any gain or loss accruing on that disposal by reference to the reduced acquisition cost of £500,000.
Where some consideration is paid for an asset by the donee but this does not exceed the donor바카라 사이트™s allowable costs under TCGA92/S38 (see CG15150P) then the relief works in the same way as above 바카라 사이트“ so in our example, Megan could have paid Tom £500,000 for the premises and the computation for the relief given would be exactly the same.
If the consideration exceeds the donor바카라 사이트™s allowable costs (excess proceeds), or other circumstances arise, then the amount of relief available is restricted, see CG66886 for these.