Advanced Taxation (UK) · Capital gains tax: gains and losses on the disposal of shares and securities

Gift Relief on Shares, Reliefs and Stamp Duty on Shares

Updated 11 October 2026

Gift relief lets you defer a capital gain on a gift of qualifying assets, such as unquoted trading company shares. The donee takes the asset at the donor's cost less the held-over gain. Stamp duty of 0.5% applies to share transfers for value. Gifts also create an IHT position that you must consider separately.

Understand Gift Relief, Reliefs on Shares and Stamp Duty on Shares

When you give shares away, CGT treats it as a disposal at market value. The donor has a gain but receives no cash. Gift relief fixes this. The gain is not taxed now. It is passed to the donee through a lower base cost.

For shares, gift relief is available for shares in a trading company that are not listed on a recognised stock exchange. It also covers shares in the donor's personal company, whether or not they are listed. A personal company is one where the donor holds at least 5% of the voting rights. This 5% test comes from the underlying legislation, not from the ACCA tax tables, so you must learn it. The personal company shares qualify only if the company is a trading company or the holding company of a trading group. Other shares listed on a recognised exchange are excluded. If the company has chargeable non-business assets, the held-over gain is restricted. This restriction applies to unquoted shares and to personal company shares alike. The restriction is by the proportion of chargeable business assets to chargeable assets.

The claim is made jointly by donor and donee. The donee's base cost is the market value at the gift less the held-over gain. If the donee later sells, the deferred gain is taxed then. Gift relief is not available if the donee is not UK resident, with limited exceptions. Where the donor receives some consideration, the gain that is immediately chargeable is the excess of the consideration over the donor's cost. The held-over gain is the chargeable gain less that excess. If the consideration is no more than the cost, the whole gain is held over.

Inheritance tax is separate. A lifetime gift to an individual is usually a potentially exempt transfer, which is exempt if the donor survives seven years. A gift into a trust is a chargeable lifetime transfer. Unquoted trading company shares can also qualify for business property relief for IHT. Always address CGT and IHT as two separate questions.

Stamp duty is a tax on the transfer of shares. The rate in the ACCA tables is 0.5%. It is paid by the buyer, on the actual consideration for a transfer for value. For a sale at undervalue, stamp duty is charged on the actual consideration paid, not on market value. A pure gift has no consideration, so there is normally no stamp duty. The tables give only the rate. Follow any threshold or rounding instruction given in the question.

Key rules to remember

Gift relief: general case: Held-over gain = Chargeable gain; donee base cost = Market value at gift − Held-over gain; Applies where the shares qualify and both parties make a joint claim.
Restriction for chargeable non-business assets: Held-over gain = Gain × (Chargeable business assets ÷ Chargeable assets); Applies to gifts of shares in a trading company, including personal company shares, where the company holds chargeable non-business assets such as investments.
Gift with some consideration: Gain chargeable now = Actual consideration − Cost, where the consideration exceeds the cost; Held-over gain = Chargeable gain − (Actual consideration − Cost); otherwise the full gain is held over; The excess of consideration over cost is taxed at once. Check the exact wording in the question.
Stamp duty on shares: Stamp duty = Actual consideration × 0.5%; The rate is shown in the tax tables. Charged on transfers for value; paid by the purchaser. For a sale at undervalue, use the actual consideration, not market value. Apply any threshold or rounding rule given in the question.
CGT rates and annual exempt amount: 18% lower rate; 24% higher rate; annual exempt amount £3,000; Taken from the tables. Gift relief can bring the donor's gain to nil, so the annual exempt amount may be saved for other use.

How to solve Gift Relief, Reliefs on Shares and Stamp Duty on Shares questions

Use the same method whenever shares are gifted or sold. It keeps CGT, IHT and stamp duty separate and shows the marker each point.

1Identify the transfer: gift, sale at undervalue or sale at full value. Note the date and the recipient.
2Compute the donor's chargeable gain using market value if the transfer is a gift. Deduct the cost.
3Test eligibility for gift relief: shares in a trading company not listed on a recognised exchange, or shares in the donor's personal company where that company is a trading company or the holding company of a trading group. Check the donee is not non-UK resident (limited exceptions apply). Both individuals and trustees can be donees.
4Restrict the relief if the company has chargeable non-business assets. Use the chargeable business assets fraction.
5Deal with any consideration received. Tax the gain not held over after deducting the annual exempt amount, at 18% or 24%.
6State the donee's base cost, which is the market value less the held-over gain.
7Add the IHT point: PET or CLT, any business property relief, and the seven-year period.
8Add stamp duty at 0.5% only if there is consideration. Say so if the answer is nil.

Quickest way: Four-line gift check

When to use it: Use it when the question is a short gift of shares and time is tight.

Write: gain = market value − cost.
Tick eligibility: unquoted or personal company, trading, joint claim.
Write the held-over gain and the donee's base cost.
Add one line each for IHT and stamp duty.

Common mistakes in Gift Relief, Reliefs on Shares and Stamp Duty on Shares

Using the sale price or ignoring market value for a gift.
Students focus on actual proceeds and forget the deemed disposal rule.
Fix: A gift to anyone, connected or not, is treated as made at market value. A sale at undervalue is treated as made at market value only if the buyer is a connected person.
Claiming gift relief on listed shares without checking the personal company conditions.
Students remember that shares qualify, not the conditions.
Fix: Check whether the shares are unlisted trading company shares first. If they are listed, check whether it is the donor's personal company, meaning at least 5% of the voting rights (a rule from the legislation, not the tax tables), and that the company is a trading company or the holding company of a trading group.
Ignoring the restriction for chargeable non-business assets.
The company is described as trading, so students assume full relief.
Fix: Look for investments or surplus property in the company balance sheet and apply the fraction. It applies to personal company shares as well as unquoted shares.
Forgetting to reduce the donee's base cost by the held-over gain.
Students stop once the donor's gain is calculated.
Fix: Always write the donee's base cost as market value less the held-over gain.
Charging stamp duty on a pure gift.
Students apply 0.5% automatically to any share transfer.
Fix: Stamp duty applies to a transfer for consideration. With no consideration, say no stamp duty is due. For a sale at undervalue, charge it on the actual consideration.
Treating the CGT and IHT results as one.
Both arise from the same gift, so they feel linked.
Fix: Use separate headings. Note that the PET, CLT and business property relief points do not affect the gift relief claim.

Worked examples

Example 1

Anika gives all her shares in Pavan Ltd, an unquoted trading company with no investments, to her adult son, who is UK resident. The shares cost £60,000 and are worth £210,000 at the date of the gift. Calculate the gain, the held-over gain and the son's base cost. Assume gift relief is claimed.

Show the solution

Chargeable gain = £210,000 − £60,000 = £150,000.
The shares are unquoted shares in a trading company with no chargeable non-business assets, so the whole gain qualifies.
The son is UK resident, so the residence condition for gift relief is met.
Held-over gain = £150,000.
Anika's gain after relief = £0, so her annual exempt amount of £3,000 is not used here.
Son's base cost = £210,000 − £150,000 = £60,000.

Answer: The held-over gain is £150,000. Anika has no gain in the year. The son's base cost is £60,000.

Example 2

Ravi gives shares in Kora Ltd, an unquoted trading company, to his daughter. The market value is £300,000 and the cost was £100,000. The company's chargeable assets are £800,000, of which £600,000 are chargeable business assets. Ravi is a higher rate taxpayer and has already used his annual exempt amount. Calculate Ravi's CGT payable on the gift, if gift relief is claimed.

Show the solution

Chargeable gain = £300,000 − £100,000 = £200,000.
Fraction = £600,000 ÷ £800,000 = 3/4.
Held-over gain = £200,000 × 3/4 = £150,000.
Gain taxed on Ravi = £200,000 − £150,000 = £50,000.
His annual exempt amount is already used, so the taxable gain is £50,000.
CGT at the higher rate of 24% = £50,000 × 24% = £12,000.
Daughter's base cost = £300,000 − £150,000 = £150,000.

Answer: Ravi pays CGT of £12,000. The daughter's base cost is £150,000.

Exam tips

Do not skip the eligibility test. Write one line stating why the shares qualify. Markers give credit for it.
Always give the donee's base cost. It is an easy mark that many students lose.
For gifts, treat CGT and IHT as separate headings, and say whether the IHT transfer is a PET or a CLT.
Use the tax tables supplied: stamp duty on shares is 0.5%, and the CGT rates are 18% and 24%.
If the question asks for advice, mention that gift relief defers the tax and does not remove it.

Practice questions from Capital gains tax: gains and losses on the disposal of shares and securities

Gift Relief, Reliefs on Shares and Stamp Duty on Shares: frequently asked questions

What shares qualify for gift relief?

Shares in a trading company that are not listed on a recognised stock exchange qualify. Shares in the donor's personal company also qualify, whether or not they are listed, but only if the company is a trading company or the holding company of a trading group. A personal company is one where the donor holds at least 5% of the voting rights; this test comes from the legislation, not the ACCA tax tables. Other listed shares do not qualify.

How does gift relief work on shares?

The donor's gain is held over instead of being taxed. The donee's base cost is reduced by the held-over gain. The deferred gain is taxed when the donee disposes of the shares.

Is there stamp duty on a gift of shares?

Stamp duty at 0.5% is charged on a transfer for consideration. A pure gift has no consideration, so normally no stamp duty is due. Where there is some payment, including a sale at undervalue, the rate applies to the actual consideration, not to market value.

Can I claim gift relief and still have an IHT charge?

Yes. The CGT relief and the IHT position are separate. A lifetime gift to an individual is usually a PET. A gift into a trust is a CLT, which may be charged to IHT, and business property relief may reduce the value.