Cassandra Graham considers the legislative oversight for business asset gift relief on a transfer of shares
There are many reasons why a shareholder may give shares away, including as part of a succession plan to provide continuity for the business and its management in the future, to pass the business ownership on to the next generation in the family or as part of a wider inheritance and estate planning exercise.
Business asset gift relief is available to defer the capital gain on gifts of qualifying business assets between parties through a joint election. Its effect is to defer the capital gains tax due on the gift until such time as the recipient disposes of the asset. This prevents dry tax charges on gifts otherwise assessed at market value and is a useful tax planning tool in every tax advisor’s armoury, provided the pitfalls are known.