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Last updated: 5 Sep 2023

Gift Relief – have you claimed it correctly?

In this article we’ve highlighted the key aspects of Gift Relief and HMRC’s recently announced campaign regarding claims made on 2021/22 tax returns.

HMRC has very recently released their latest campaign and this is aimed at Gift Relief claims made on 2021/22 tax returns. HMRC is sending letters to individuals to confirm claims are complete and correct.

About the author

Neal Lees

+44 (0)20 3972 6627
leesn@buzzacott.co.uk
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What is Gift Relief?

Gifting an asset is considered as a disposal for Capital Gains Tax (CGT) purposes and so could give rise to a tax liability, even where no proceeds are received. In some circumstances, an individual can claim Gift Relief (also known as holdover relief) and delay the payment of CGT.

What assets are eligible for Gift Relief?

Gift Relief is only available on qualifying assets. These include:

Business assets, such as land and buildings or plant and machinery used for the purpose of trade
Shares in an unquoted trading company
Shares in a quoted trading company (where the individual directly owns 5% or more of the voting rights)
Agricultural land
Any assets on which the gift is immediately chargeable to Inheritance Tax (IHT) - this is generally where a transfer into trust is made

A Furnished Holiday Let (FHL) is also included as a trade for Gift Relief purposes, as long as all FHL conditions have been met.

How to claim Gift Relief

The claim for Gift Relief must be included on your Self-Assessment tax return, with a HS295 form attached, and signed by all required parties. HMRC has advised that any claims for Gift Relief without the form attached to the return, or where the form has not been properly signed, will be contacted as part of the campaign.

Your tax return for 2021/22 can be amended until 31 January 2024 and so if you have not completed the HS295 form as required, there’s time to correct your return.

If HMRC is not satisfied that a valid claim for Gift Relief has been made within 30 days of the issue of their campaign letter, HMRC will ‘correct’ the return itself by denying the relief, thus giving rise to CGT becoming payable with immediate effect.

What should you do?

Whether or not you have received a letter from HMRC, if you made a claim for Gift Relief in 2021/22, you should review your tax return to check that a HS295 form was completed in full and correctly signed. Failing to correct any invalid claim will result in CGT, along with interest and possibly late payment penalties, becoming due.

Get in touch

For professional advice on claiming Gift Relief, or if you need assistance with completing/reviewing your 2021/22 claim, please fill in the form below and one of our experts will be in touch to discuss your requirements and how we can help.