Talk of rises in rates of Capital Gains Tax (CGT) has been ongoing since long before the cancelled Autumn budget. On Wednesday 11 November 2020, the Office of Tax Simplification (OTS) published its first of two reports on the review of CGT reform which is taking place at the request of the Chancellor (for an overview of this review, please see: Capital Gains Tax: is change afoot?). Two of the recommended proposals are to more closely align rates of CGT with rates of income tax and to reduce the annual CGT allowance.

The continued uncertainty surrounding anticipated rises in CGT is understandably a cause for concern for many who are holding assets standing at a significant gain (outside a tax-efficient vehicle). However, it is not all doom and gloom, where gifting assets into trust now may provide an opportunity to shield one’s assets to an extent from any impending CGT changes.

For gifts of assets into discretionary trust made before 6 April 2021, the person making the gift (the donor) will effectively have until January 2022 to decide whether to let the CGT charge crystallise (at current, known rates) or otherwise ‘hold over’ the gain to the trustees to pay CGT when they dispose of the assets (potentially at the new rates, where the disposal takes place after 6 April 2021). This ability to transfer value into trust now but to defer the decision as to whether or not to claim the hold over relief allows the donor to ‘hedge’ their position to some extent and provides breathing space to adapt to any changes in CGT rates. The donor can review the position in light of all the circumstances at the point the gain becomes reportable (i.e. in January 2022) rather than make a definitive decision now, in uncertain circumstances. This sort of planning can be valuable, particularly where CGT changes are anticipated.

Of course, gifting into trust may come with other tax implications; a transfer of an asset from an individual into trust is a chargeable transfer for the purposes of inheritance tax (IHT). This means that to the extent the transfer exceeds the donor’s nil rate band (currently £325,000), the gift may be immediately chargeable to IHT at the lifetime rate of 20% unless, for example, reliefs such as Business Property Relief (BPR) apply – a significant point to consider. However, where you may wish to undertake some IHT planning anyway, e.g. by giving to the next generation shares in a private trading company that qualify for 100% BPR from IHT, this CGT angle may be an interesting additional consideration right now.

For those concerned about potential CGT rises this year, or already planning to make gifts of assets into trust, it is worth considering whether now might be the right time to consider making such gifts into trust, as a strategy to preserve a certain amount of flexibility and certainty when heading into this uncertain future. If you are thinking of doing this anyway, consider acting now, potentially even before the budget on 3 March and certainly before any binding contract for sale of your BPR qualifying asset. Furthermore, a trust is not necessarily required to get business property holdover from CGT, meaning there are even wider planning opportunities potentially available.

For the avoidance of doubt, this article does not constitute legal advice. For more information or advice on this, please contact Julia Cox at or Alexandra Clarke at