The Smart Way to Gift Business Shares or Assets 2025/26

Passing shares or business assets to family members can be a smart move. Whether it’s to bring them into the company, support their future, or reduce potential tax. But it’s important to do it the right way to avoid unexpected costs.

Don't pay more than you need to. Get the advice.

Understanding what happens when you give away shares

When you transfer shares in your company, HMRC sees it as if you’d sold them at market value, even if no money changes hands. That means you could face Capital Gains Tax (CGT) on the increase in value since you first acquired them.

The good news is there’s relief available to delay or reduce that tax.

Gift Hold-Over Relief

The main one is Gift Hold-Over Relief. It allows you to “hold over” the gain, meaning you don’t pay CGT now. Instead, the person receiving the gift takes on your original cost base, and the tax only becomes due when they sell or transfer the shares in the future.

This relief applies to:

• Shares in a trading company (not an investment company)

• Business assets like land, machinery, or goodwill

You and the recipient must both agree to claim it, using HMRC’s HS295 form.

Gifts and Inheritance Tax

Gifts can also help reduce Inheritance Tax, but timing matters. Most gifts are considered “potentially exempt transfers”. That means if you survive seven years after making the gift, it’s fully outside your estate for IHT purposes.

However, if you die within seven years, some or all of the gift’s value could still be taxable (although taper relief can reduce the rate after three years).

Bringing family into the business

Transferring shares can also be a way to involve family members in ownership or succession. But remember, ownership and control aren’t the same thing.

You can give away non-voting shares to let family benefit financially without giving up decision-making power.

Documentation is key

Every share transfer should be properly documented with new share certificates, updates to the company register, and filings at Companies House. Even between family members, treat it like a professional transaction to avoid confusion later.

The simple takeaway

Gifting shares or assets is a valuable planning tool, but it needs care to avoid immediate tax bills or future disputes. A small amount of advice before acting can save a lot of problems down the line.

Need help making sense of your taxes? JSC Accounting works with small businesses across the UK to keep things simple and compliant. Get in touch for a friendly chat about how we can help.

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