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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Gifts: disposal of shares: non-business chargeable assets

A sells to his son B for £130,000 shares in an unquoted family company which cost him £40,000 and which Shares and Assets Valuation agree are worth £300,000 at the time of disposal.

An indexation allowance of £10,000 is due.

A joint claim is made for relief under Section 165.

The computation is as follows

i) The unrelieved gain on the disposal is

Market value at disposal   300,000
Less cost   40,000
Unindexed gain   260,000
Indexation allowance   10,000
  gain 250,000

ii) Computation of the excess consideration

Actual consideration 130,000
Less sums allowable under Section 38 40,000
Excess 90,000


Reducing the unrelieved gain on the disposal by the excess gives 250,000 - 90,000 = 160,000

iii) The market value of the company’s total chargeable assets is agreed to be £100,000 and of the company’s total chargeable business assets is agreed to be £80,000 after reference to the Valuation Office Agency in respect of any land and to Shares and Assets Valuation in respect of any unquoted shares or securities. The reduction required, see CG66970+, is therefore

160,000 x 80,000 = 128,000


The held-over gain is therefore 128,000.

A: Gains before relief 170,000
Less held-over gain 128,000
Assessable gain 42,000
B: Market value 300,000
Less held-over gain 128,000
Revised cost 172,000