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HMRC’s Nudge Letters Demand Urgent Review of Gift Hold-Over Relief Claim

Published by Chirag
Posted Date: September 21, 2023 , Modified Date: January 24, 2024

Starting from the end of August 2023, HMRC is taking proactive steps by issuing One to Many, or 'nudge,' letters to taxpayers who have made Gift Hold-over claims in their 2021/2022 tax returns but either failed to submit the required claim form or submitted a form that was not signed by both the donor and the recipient.

Understanding Gift Hold-over Relief

Gift hold-over relief can be availed when you give away business assets, including certain shares, or sell them for less than their actual value to assist the buyer. This relief exempts you from paying capital gains tax when transferring the assets. Instead, the person receiving them becomes liable for the tax when they eventually sell or dispose of the assets.

The eligibility criteria for claiming this relief differ based on whether you are giving away business assets or shares:

  • If you are transferring business assets, you must be a sole trader or business partner, or hold at least 5% of the voting rights in a company (referred to as your 'personal company'). These assets must also be used in your business or personal company.
  • If you are transferring shares, they must belong to a trading company that is not listed on any recognised stock exchange, or they must be in your personal company.

Responding to the Nudge Letter

If you receive one of these nudge letters, you are granted a 30-day window to take action. You can either amend your tax return or submit the correct completed forms to rectify the situation. Failing to do so may prompt HMRC to amend your return or initiate an inquiry. 

Learn more about HMRC Investigation and Tax Enquiries.

Gift Hold-Over Relief

If you have received a letter from HMRC, and want to know if its HMRC's nudge letter for Gift Hold-over relief claim, compare it with this example - HMRC Nudge letter for Gift Hold-over relief.

It's crucial for affected taxpayers to act promptly upon receiving the nudge letter to ensure compliance with tax regulations and prevent potential complications down the road.

How Can UKPA Help?

Feeling anxious about receiving a letter from HMRC nudging you submit your forms? If you have received the letter, and want to know more about Gift Hold-over Relief, we are here to help.

At UKPA our team of experts and tax professionals ensures that your financial future remains secure and hassle-free. Contact us now and receive a free initial 15-minute discovery call from us.

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