Rollover relief vs gift holdover relief

Q: What does each relief do to the gain?

Rollover relief. Section 152(1) Taxation of Chargeable Gains Act 1992 treats the old asset as sold for a figure that produces neither gain nor loss, and reduces the cost of the new asset by the gain that would otherwise have been taxed. The same person still owns the deferred gain; it sits inside the new asset. Gift holdover relief. Section 165(4) reduces both the giver's chargeable gain and the recipient's acquisition cost by the held over gain. The gain moves to a different person. HMRC's helpsheet HS295 gives a simple example: an asset worth £50,000 that cost £17,000 is given to a brother. The £33,000 gain is held over, so the brother's base cost is £17,000 rather than £50,000.

Q: Who can claim, and who has to sign?

PointRollover reliefGift holdover relief Who can use itAny person carrying on a trade, including a company; an individual whose personal company (at least 5% of voting rights) uses the asset can claim under section 157An individual or the trustees of a settlement making the disposal; not a company as giver Who claimsThe trader alone, on form HS290Giver and recipient jointly on the HS295 claim form, except gifts to trustees, where the giver claims alone Time limitFour years from the end of the tax year in which the new asset was bought, or the old one sold if later (GOV.UK)Four years from the end of the tax year of the gift (CG66889) Recipient conditionsNot relevantRecipient must generally be UK resident (section 166), with an exception for interests in UK property CG66889 adds that HMRC will not accept a holdover claim that tries to hold over only part of the gain, for example to use the giver's annual exempt amount. The relief is all or nothing for the gain it covers.

Q: What happens to the deferred gain later?

Rollover. The gain comes back into charge when the new asset is sold, unless it is rolled over again. Where the new asset is a depreciating asset, such as fixed plant or machinery or anything expected to last less than 60 years, GOV.UK explains that the gain is held for up to 10 years rather than reducing the new asset's cost. See rollover relief into depreciating assets. Holdover. The recipient pays the tax when they dispose of the asset. HS295 explains that if an individual recipient emigrates within six years of the end of the tax year of the gift while still owning the asset, the held over gain is charged on them, and HMRC can in some cases collect it from the giver (see holdover clawback on emigration). If the recipient dies holding the asset, the normal exemption on death applies. Where a holdover gift also triggers inheritance tax, section 165(10) lets the recipient deduct that inheritance tax, within limits, when they later sell.

Both reliefs postpone a capital gain rather than remove it, but they work in opposite directions. Rollover relief under section 152 TCGA 1992 is claimed by the trader alone when sale proceeds are reinvested in new business assets, and the gain reduces the cost of those new assets. Gift holdover relief under section 165 is claimed jointly by the giver and the recipient when a business asset is given away or sold cheaply, and the gain passes to the recipient by reducing their base cost.

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The two reliefs are often mentioned together because both apply to business assets and both are claimed on a form attached to the tax return. They answer different situations: rollover relief fits an owner who is selling and buying, while holdover relief fits an owner who is passing an asset on, usually within the family. Our separate guides cover rollover relief on business assets and gift holdover relief in depth. This page compares them.

What does each relief do to the gain?

Rollover relief. Section 152(1) Taxation of Chargeable Gains Act 1992 treats the old asset as sold for a figure that produces neither gain nor loss, and reduces the cost of the new asset by the gain that would otherwise have been taxed. The same person still owns the deferred gain; it sits inside the new asset.

Gift holdover relief. Section 165(4) reduces both the giver’s chargeable gain and the recipient’s acquisition cost by the held over gain. The gain moves to a different person. HMRC’s helpsheet HS295 gives a simple example: an asset worth £50,000 that cost £17,000 is given to a brother. The £33,000 gain is held over, so the brother’s base cost is £17,000 rather than £50,000.

Who can claim, and who has to sign?

Point	Rollover relief	Gift holdover relief
Who can use it	Any person carrying on a trade, including a company; an individual whose personal company (at least 5% of voting rights) uses the asset can claim under section 157	An individual or the trustees of a settlement making the disposal; not a company as giver
Who claims	The trader alone, on form HS290	Giver and recipient jointly on the HS295 claim form, except gifts to trustees, where the giver claims alone
Time limit	Four years from the end of the tax year in which the new asset was bought, or the old one sold if later (GOV.UK)	Four years from the end of the tax year of the gift (CG66889)
Recipient conditions	Not relevant	Recipient must generally be UK resident (section 166), with an exception for interests in UK property

CG66889 adds that HMRC will not accept a holdover claim that tries to hold over only part of the gain, for example to use the giver’s annual exempt amount. The relief is all or nothing for the gain it covers.

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Which assets qualify for each relief?

Rollover relief depends on the classes of assets in section 155. The main ones are buildings and property occupied and used only for the trade, fixed plant and machinery, ships, aircraft and goodwill. Both the old and the new asset must be in a listed class and used only for the trade, although they need not be in the same class. Companies dealing with goodwill and other intangible assets use a separate reinvestment relief, as HMRC’s Corporate Intangibles Research and Development Manual (CIRD20025) explains.

Holdover relief under section 165 covers:

assets used in a trade, profession or vocation carried on by the giver, their personal company or a member of a trading group whose holding company is their personal company;
shares in a trading company or holding company of a trading group that are not listed on a recognised stock exchange (HS295 confirms AIM is not a recognised stock exchange), or shares in the giver’s personal company;
agricultural property that would qualify for inheritance tax agricultural relief.

A separate holdover under section 260 covers gifts that are chargeable transfers for inheritance tax, such as gifts into a relevant property trust, whatever the asset. See holdover relief on gifts into trust.

Does money have to change hands?

For rollover relief, yes. The relief follows the proceeds. If all the proceeds are reinvested the whole gain is deferred; under section 153, if part is held back and that part is less than the gain, the amount held back is taxed now and the rest is rolled over. The new asset must be acquired, or an unconditional contract made, in the window from 12 months before to 3 years after the disposal.

For holdover relief, the transfer must be a gift or a sale not at arm’s length. If the recipient pays something, section 165(7) taxes the giver immediately on the amount by which the actual payment exceeds the giver’s allowable cost. HS295 illustrates this with a shop worth £81,000 that cost £23,000 and is sold to a brother for £40,000: £17,000 is taxed now and £41,000 is held over.

What happens to the deferred gain later?

Rollover. The gain comes back into charge when the new asset is sold, unless it is rolled over again. Where the new asset is a depreciating asset, such as fixed plant or machinery or anything expected to last less than 60 years, GOV.UK explains that the gain is held for up to 10 years rather than reducing the new asset’s cost. See rollover relief into depreciating assets.
Holdover. The recipient pays the tax when they dispose of the asset. HS295 explains that if an individual recipient emigrates within six years of the end of the tax year of the gift while still owning the asset, the held over gain is charged on them, and HMRC can in some cases collect it from the giver (see holdover clawback on emigration). If the recipient dies holding the asset, the normal exemption on death applies.

Where a holdover gift also triggers inheritance tax, section 165(10) lets the recipient deduct that inheritance tax, within limits, when they later sell.

How do the two compare on a typical business owner?

Illustration only. A sole trader owns a workshop used only in the trade. It cost £150,000 and is worth £270,000, so the gain is £120,000.

Selling and buying. She sells for £270,000 and, two years later, buys a larger unit for £320,000 for the same trade. All the proceeds are reinvested, so a rollover claim defers the whole £120,000. The new unit’s base cost becomes £200,000. She pays no tax now but will face the deferred gain if she sells the new unit without replacing it.
Passing it on. Instead she gives the workshop to her son, who takes over the trade. A joint holdover claim means she pays nothing and her son’s base cost is £150,000. If she had charged him £180,000, she would pay tax now on £30,000 (£180,000 less £150,000) and hold over £90,000.

Without either relief the £120,000 gain would be taxed at the 2026 to 2027 rates of 18% or 24%, or 18% if Business Asset Disposal Relief applied.

What mistakes come up most often?

Trying to roll over into an asset that is let or used partly for non trade purposes. Section 152(6) apportions buildings used partly for the trade, and investment property does not qualify.
Missing the reinvestment window. The provisional relief route in provisional rollover relief claims helps, but the time limit is fixed.
Filing a holdover claim signed only by the giver when the recipient is an individual.
Assuming holdover relief works for a let residential property. It does not qualify as a business asset under section 165, so a gift outright to a family member is taxed at market value with no holdover.
Giving shares to a company. Section 165(3)(ba) blocks holdover on shares where the recipient is a company.
Forgetting that a holdover reduces the recipient’s base cost permanently, which shifts the tax rather than removing it. On incorporation, compare the options in gift holdover or incorporation relief.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.