This provision clarifies an existing restriction on the relief generally available on gifts of trading assets, known as gift holdover relief. This relief effectively defers capital gains tax on the gift to the time of a future disposal by the recipient, who inherits the donor’s base cost.
At present this relief is not available on gifts to companies controlled by non-UK tax residents who are connected to the donor. The measure clarifies that this restriction also applies where the non-resident controlling that company is the donor themselves.
This measure will be relevant to a relatively small number of individuals who are non-UK resident and make gifts to companies which they control.
This change will have effect in respect of disposals made on or after 6 April 2021.
In our view this slight adjustment to the existing rule will have a limited impact. This change is described by HMRC as an anti-avoidance measure intended to ensure the existing restriction works more effectively.
This change may make a material difference for particular individuals in specific circumstances, such as temporarily non-resident individuals.