Severn Accounting
Tax & Accounting

Gift the holiday let by 5 april 2025 to benefit from hold over

By Ali Jaw ·

Many UK property owners have holiday lets generating rental income, and if you’re considering a significant change to your property portfolio, the timing of that decision could have meaningful tax consequences. There’s an important window closing on 5 April 2025 that deserves your attention: if you gift a holiday let to a family member or trust before the tax year end, you could unlock valuable tax relief through hold-over relief. This article explains how it works, who might benefit, and what you need to do.

Understanding hold-over relief for gifts of business assets

Hold-over relief (also called gift relief) is a capital gains tax (CGT) provision that allows you to defer, rather than eliminate, a gain when you gift certain business assets. Ordinarily, when you sell or give away an asset that’s increased in value, you’re liable to CGT on the gain. With hold-over relief, that tax liability is effectively transferred to the recipient.

For holiday lets specifically, relief is available if the property qualifies as a business asset. This typically means you’ve been letting it out regularly as a holiday rental with a view to profit — furnished holiday lets (FHLs) registered with HMRC are the clearest example. The key benefit: you avoid paying CGT on the gain immediately, and the recipient inherits the asset at your base cost (not the market value). When they eventually sell, they’ll pay CGT on the gain from your original cost to their sale price.

Why April 2025 matters

The 2024–2025 tax year ends on 5 April 2025. If you gift the property on or before that date, the relief claim can be made within four years of the gift (until 5 April 2029). Delaying until after 5 April 2025 moves the transaction into the next tax year, pushing back those deadlines by twelve months. For planning purposes, completing the gift before the year end provides psychological closure and ensures the transaction is recorded in the correct tax year.

More importantly, the current CGT annual exemption (2024–2025) is £3,000. If you have other disposals or gains in the pipeline, gifting before the year end lets you ring-fence this holiday let transaction separately in your tax planning. Additionally, if your circumstances change between now and April — such as a change in income level, additional property sales, or changes to residential property relief rules — you’ll have already secured the position.

How to make the claim

To benefit from hold-over relief, both you and the recipient must jointly elect for the relief. This isn’t automatic; HMRC won’t apply it without your request. You’ll typically complete this by filing form CA24 (‘Election to hold over a gain’) with your Self Assessment tax return.

Here’s the process:

Obtain a professional valuation. You’ll need to establish the market value of the property at the date of gift for the purposes of the election. A surveyor’s report is advisable.

Complete the gift documentation. If the property is registered at HM Land Registry, you’ll need to complete a transfer deed and submit it to the Land Registry. This formally records the change of ownership.

Notify HMRC. Report the gift and claim hold-over relief on your Self Assessment tax return for the 2024–2025 tax year (due 31 January 2026). Ensure the recipient is aware they’re inheriting the asset at your base cost, not the gifted value.

Keep records. Retain the valuation, the transfer deed, and correspondence with HMRC. These will be essential if the recipient sells the property later.

Who should consider this?

This strategy works best if:

  • You own a furnished holiday let that has increased significantly in value
  • You want to pass the property to a family member or into a trust
  • You wish to avoid a large CGT bill now
  • The recipient is comfortable inheriting the asset with the understanding that CGT will be due when they sell

It’s less relevant if the property has minimal gain, if you need to sell (rather than gift) the asset, or if the recipient is unlikely to sell within a foreseeable timeframe.

Final thoughts

Gifting a holiday let before 5 April 2025 isn’t right for everyone, but for those with substantial accumulated gains, it’s a legitimate and effective way to manage your tax position. The key is acting promptly and getting the paperwork right — HMRC is strict about procedural requirements for hold-over relief claims.

If you’re unsure whether your holiday let qualifies, or you’d like to explore whether this strategy fits your circumstances, don’t leave it to chance.

For tailored advice, contact Severn Accounting — we’re here to help.