Can I use EIS to defer CGT on a UK property gain?

Yes. EIS deferral relief under Schedule 5B TCGA 1992 applies to any chargeable gain regardless of the asset class that produced it. A landlord disposing of a BTL property at a gain can defer the CGT by subscribing for qualifying EIS shares within the window of 12 months before to 36 months after the disposal. The investment amount that matches the gain is the amount of CGT deferred. The deferred gain crystallises and becomes chargeable when the EIS shares are sold (or otherwise lose qualifying status). Critically, holding the EIS shares until death extinguishes the deferred gain through the CGT base-cost uplift on death, which is the planning point most often missed when explaining EIS to older landlords.

What happens to the deferred CGT if the EIS company fails?

If the EIS shares become worthless the deferred gain still crystallises but can be offset by a capital loss on the EIS shares themselves (which can usually be claimed as a negligible value claim under section 24 TCGA 1992 if the company has failed, or as a straight capital loss on disposal). Whether the loss fully covers the crystallised gain depends on the amounts: a £100,000 EIS investment that becomes worthless produces a £100,000 capital loss, which offsets the £100,000 crystallised deferred gain on a like-for-like basis. EIS income tax relief (30% of the subscription) can also be claimed as additional protection during the holding period, but it does not directly offset the deferred CGT. EIS deferral works best as a measured planning tool, not as a low-risk income tax shelter.

Can transferring property to a spouse before sale defer CGT?

Section 58 TCGA 1992 treats inter-spouse and civil partner transfers as no-gain-no-loss disposals. The receiving spouse takes the original base cost across, which defers the gain on the transferred share until that spouse disposes to a third party. This is technically a transfer not a deferral, but in practice it can shift a future gain into a tax year and a tax rate that work better (the receiving spouse's basic-rate band, their own £3,000 annual exempt amount). It does not move an existing carried-forward capital loss across. For full s.58 mechanics see our spouse transfer guide .

What is the difference between CGT deferral and CGT reduction?

Deferral pushes the tax point into the future. Reduction shrinks the chargeable gain (or extinguishes it). EIS Sch 5B, section 152 rollover, section 165 / section 260 holdover and section 162 incorporation relief are deferral mechanisms: the gain still exists in the system, attached to a different asset or a future event, and crystallises when the deferred-gain event happens. Private Residence Relief, the £3,000 annual exempt amount, and capital losses are reduction mechanisms: they shrink the chargeable gain at the point of disposal. The two work together: most actual planning combines a reduction lever (PRR, AEA-stacking via spouse split, capital loss offset) with a deferral lever where the residual gain is still material. Our reduce CGT on property disposal guide covers the reduction side.

Can I claim incorporation relief on a portfolio of buy-to-let properties?

Section 162 TCGA 1992 incorporation relief is the most commonly applicable deferral route for portfolio landlords. The mechanic transfers the property business (not just a single property) to a company in exchange for shares, and rolls the CGT gain into the shares' base cost. The relief is automatic where the conditions are met: the transfer is of a business as a going concern (HMRC case law and Statement of Practice SP D12 set out the test, with active management of the portfolio at a level meeting the Ramsay v HMRC [2013] threshold typically required), the consideration is wholly or partly shares in the company, and the assets transferred amount to the whole business. The deferred gain crystallises when the shareholder later disposes of the shares (not when the company later disposes of the property). The base cost of the shares is reduced by the rolled-over gain. SDLT and CGT interact on incorporation: see our BTL limited company guide for the full incorporation sequence including the SDLT partnership-relief route and the multiple dwellings relief position.

Does the s.169B holdover block affect EIS or rollover deferral routes?

No. Section 169B TCGA 1992 is specifically a holdover block: it prevents section 260 holdover relief on transfers into settlor-interested trusts and certain other related-party trust structures. The block does not affect section 152 rollover, section 165 holdover-on-gift-of-business-assets, or Sch 5B EIS deferral. Those four routes (EIS, s.152, s.165, s.260) have separate statutory frameworks. The s.169B block matters specifically when planning a property settlement on trust where the settlor or their family retain an interest, which is a narrow scenario. Our Wave 6 settlor-interested trust guide covers the s.169B mechanics in depth.

What is the gifts-with-reservation-of-benefit (GROB) trap when gifting property?

Section 102 Finance Act 1986 treats a gift as a 'gift with reservation of benefit' (GROB) for inheritance tax purposes where the donor continues to benefit from the asset after the gift. The classic property case is a parent gifting their home to an adult child while continuing to live in it rent-free. The transfer is a valid disposal for CGT (potentially eligible for s.165 holdover if it's a business asset, or s.260 holdover if into trust), but for IHT the property remains in the donor's estate until the reservation ceases. The CGT deferral works; the IHT planning does not. The GROB trap also catches arrangements where the donor 'rents back' at below market rent. Pre-Owned Asset Tax (POAT) is a parallel anti-avoidance regime that can apply to the same fact patterns. Anyone using a CGT deferral route on a gift to family should treat the IHT GROB and POAT angles as the separate planning question they are.

Can a former FHL disposal in 2025/26 or 2026/27 still use rollover relief?

Only in narrow circumstances. The Furnished Holiday Lettings (FHL) regime was abolished by Finance Act 2025 with effect from 6 April 2025. Pre-6-April-2025 FHL businesses could potentially qualify for rollover relief on disposal of qualifying business assets (because FHL was a 'quasi-trading' regime for limited purposes). Anti-forestalling rules between the 6 March 2024 announcement and the 5 April 2025 abolition closed routes that attempted to crystallise pre-abolition disposals artificially. From 6 April 2025, former FHL properties are taxed as standard residential rental property, which is investment activity, which does not qualify for s.152 rollover. The grandfathered position for pre-2025 BADR claims is covered in our Wave 6 FHL grandfathered claims guide .

What is the 12-month-before / 36-month-after window for EIS deferral?

Schedule 5B TCGA 1992 requires the EIS share subscription to fall in a window that opens 12 months before the disposal date that produced the gain and closes 36 months after that disposal date. So a property gain crystallising on 1 June 2026 can be deferred by an EIS subscription dated between 1 June 2025 and 1 June 2029. The amount of CGT deferred is the lower of (a) the EIS subscription amount and (b) the chargeable gain. If the EIS investment is smaller than the gain, only that proportional share of the gain is deferred. The EIS shares must be held for at least 3 years (and the company must maintain its EIS qualifying status throughout that period) for the deferral to stick. Early disposal of the EIS shares within 3 years crystallises the deferred gain on top of any gain or loss on the EIS shares themselves.

Does the death-uplift forgive a deferred EIS gain?

Yes, and this is the most powerful EIS deferral feature for older property investors. Section 62 TCGA 1992 deems all chargeable assets to be acquired at market value on the date of death (the CGT 'free uplift' on death). The deferred gain attached to the EIS shares is extinguished if the EIS shares are still held at death: there is no chargeable event triggering crystallisation, and the deceased's personal representatives acquire the EIS shares at probate-value with the deferred gain extinguished. The effect is that a 70-year-old landlord disposing of a BTL at a £500,000 gain, subscribing for £500,000 of EIS shares, holding for 10 years and dying still holding, has effectively extinguished the £500,000 CGT entirely. This planning works only if the EIS shares are held until death; selling them earlier crystallises the deferred gain in the normal way.

Can a non-UK resident landlord use EIS deferral on a UK property gain?

Non-UK residents pay UK CGT on UK residential property disposals under the Non-Resident CGT (NRCGT) regime (see our NRCGT guide ). Schedule 5B TCGA 1992 EIS deferral relief is technically available to non-UK residents who acquire qualifying EIS shares, but the practical complications are significant: the EIS income tax relief (30%) requires UK tax liability to set against, which most non-residents do not have; the EIS company must be a UK qualifying trading company; and the deferred gain crystallises when the non-resident sells the EIS shares, at which point UK CGT may still apply. For most non-UK resident landlords, EIS deferral is not the primary planning route. Spouse-share planning (s.58) where one spouse is UK resident, or holding-and-selling-after-becoming-non-resident-of-the-EIS-company-not-the-shares analysis, are the more usual planning routes. Specialist advice is strongly recommended.

How does s.162 incorporation relief differ from s.165 holdover?

Both defer the CGT, but on different fact patterns. Section 162 incorporation relief is automatic where the transfer of an entire business to a company in exchange for shares meets the going-concern conditions: the property business becomes the company's, the CGT gain rolls into the shares' base cost, and the gain crystallises when the shareholder disposes of the shares. Section 165 holdover requires an election (not automatic), applies to a gift of a business asset (not a sale, and not a transfer for full consideration), and rolls the donor's base cost across to the donee, with the gain crystallising when the donee disposes. The two reliefs apply to very different events: incorporation versus gift. Both share the underlying mechanic of pushing the gain into the future, but the structural choices and the qualifying conditions are distinct. For property investors, s.162 is the typical incorporation route and s.165 is rarely available (because residential rental is not a 'business' in the trading sense that s.165 requires).

What records do I need to support an EIS deferral claim?

EIS3 certificate from the issuing company (this is the document that establishes the shares as qualifying EIS shares), the subscription confirmation showing the date of share issue, the disposal documents for the property producing the deferred gain (sale contract, completion statement, CGT computation), and the EIS deferral claim itself on the SA108 capital gains pages of the Self Assessment return for the year of the EIS subscription. Retain the EIS3 certificate and the subscription confirmation for the entire holding period (potentially decades) because the documents will be needed if and when the deferred gain crystallises. HMRC standard retention is at least 22 months after the end of the tax year for non-business taxpayers and five years and 10 months for business taxpayers; for EIS deferrals retain indefinitely while the deferral is live.

Capital Gains Tax

CGT Deferral for UK Property Investors: 2026/27 Mechanics Guide

24 May 2026 · Property Tax Partners Editorial Team · 16 min read

CGT deferral on a property disposal pushes the tax point into the future without erasing the gain. The four routes that work for property investors in 2026/27 are: EIS deferral relief under Schedule 5B TCGA 1992 (the only route that works on any chargeable gain, including standard BTL), incorporation relief under section 162 (the typical portfolio-landlord route), s.165 / s.260 holdover for narrow gift cases, and the s.152 rollover route (closed to standard BTL investment). This guide sets out the mechanics, the trade-offs and the case where each route is the right answer.

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CGT deferral on a UK property disposal pushes the tax point into the future without erasing the gain. The four routes that practically work for property investors in 2026/27 are: Enterprise Investment Scheme deferral relief under Schedule 5B of the Taxation of Chargeable Gains Act 1992 (the only route that defers any chargeable gain including standard BTL), incorporation relief under section 162 (the typical portfolio-landlord route), section 165 or section 260 holdover relief (narrow gift cases), and section 152 rollover relief (closed to standard BTL investment, available to commercial owner-occupiers and pre-April-2025 FHL businesses).

This guide sets out each route's statutory framework, the conditions, the worked mechanics, and the case where the route is the right answer for a property-investor fact pattern. For broader CGT reduction levers (PRR, AEA stacking, capital losses), see the reduce CGT on property disposal guide. For the CGT framework as a whole (rates, AEA, computation), see the CGT on UK property complete guide.

Deferral versus reduction: what each does

Deferral and reduction are often conflated. The distinction is structural and matters for choosing the right route:

Reduction shrinks the chargeable gain at the point of disposal. Private Residence Relief, the £3,000 annual exempt amount, capital loss offset, and the spouse-share rate-band split are all reduction mechanisms. The gain is smaller (or zero) when it leaves the calculation. There is nothing to crystallise later.
Deferral pushes the gain into the future. EIS Sch 5B, s.152 rollover, s.165 / s.260 holdover, and s.162 incorporation relief are deferral mechanisms. The gain still exists, attached to a different asset (the EIS shares, the new business asset, the donee's hands, the shares in the company), and crystallises when the deferred-gain event happens.

Most actual planning combines a reduction lever (PRR, AEA, spouse split) with a deferral lever where the residual gain is still material. The four sections that follow are the four deferral routes available to property investors in 2026/27.

EIS deferral relief: Schedule 5B TCGA 1992

The Enterprise Investment Scheme deferral relief under Schedule 5B TCGA 1992 is the only deferral route that works on any chargeable gain regardless of the asset class. A property gain on a standard BTL disposal qualifies in exactly the same way as a gain on a share disposal or any other chargeable asset. This makes EIS deferral the structural workhorse of property-gain deferral planning.

The mechanic

The investor subscribes for qualifying EIS shares within a window that opens 12 months before the disposal date that produced the gain and closes 36 months after. The amount of CGT deferred is the lower of (a) the EIS subscription amount and (b) the chargeable gain. The deferred gain attaches to the EIS shares and crystallises when the shares are sold (or otherwise lose qualifying status, including early sale within 3 years, or company-level loss of EIS qualifying status).

The death-uplift planning point

Section 62 TCGA 1992 deems all chargeable assets to be acquired at market value on the date of death (the CGT "free uplift" on death). Where the EIS shares are still held at death, the deferred gain is extinguished: there is no chargeable event triggering crystallisation, and the personal representatives acquire the shares at probate value. For older landlords, holding-EIS-to-death is the structural planning that converts a deferred gain into a permanently-extinguished gain.

Worked illustration

A 65-year-old landlord disposes of a long-held London BTL in June 2026 for £750,000, against a £350,000 base cost. The chargeable gain is £400,000. After the £3,000 AEA the taxable gain is £397,000, and at 24% (higher-rate) the CGT bill is £95,280, payable through the 60-day return by 31 July 2026.

If instead the landlord subscribes for £400,000 of qualifying EIS shares within the 12-months-before-to-36-months-after window, the full £400,000 chargeable gain is deferred. No 60-day CGT liability arises (subject to filing the deferral claim correctly). The £400,000 deferred gain attaches to the EIS shares. If the landlord still holds the EIS shares at death, the gain is extinguished. If the landlord sells the EIS shares 8 years later (still alive), the £400,000 deferred gain crystallises in the year of sale, at the CGT rates then in force.

The risks

EIS shares are illiquid (typically no secondary market for 3+ years) and high-risk (many early-stage companies fail). The investment is appropriate as a deferral tool only where the investor can tolerate (a) the illiquidity and (b) the possibility of total capital loss. If the EIS company fails, the deferred gain still crystallises but is usually offset by a capital loss on the worthless EIS shares (claimable via section 24 negligible value claim; see our capital losses guide). The 30% EIS income tax relief on the subscription provides some downside protection but is not the deferral mechanic.

Section 152 rollover relief: closed to standard BTL

Section 152 TCGA 1992 rollover relief lets a trader defer CGT by reinvesting disposal proceeds into a replacement qualifying business asset. The deferral works by rolling the gain into the base cost of the replacement asset, which postpones CGT until that asset is eventually disposed of.

The qualifying-asset classes are listed in section 155 TCGA 1992. Class 1 Head A is the relevant class for property: land or buildings "occupied (as well as used) only for the purposes of the trade". The "occupied and used only for trade" requirement is the load-bearing exclusion of investment property. Standard residential letting is settled as investment activity, not a trade. The Salisbury House Estates v Fry [1930] line of authority is the anchor, with Griffiths v Jackson [1983] and the Marson v Morton [1986] badges-of-trade framework providing the analytical structure.

Three groups of property holdings do qualify:

Commercial owner-occupiers running their own trade from the premises (a freehold surgery used by the GP partnership; a freehold workshop used by the manufacturing business). Selling those premises to buy new business premises is a textbook s.152 rollover.
Property developers where trading status can be evidenced (frequent transactions, profit-seeking motive, short holding periods, active development activity). Marson v Morton badges apply.
Pre-6 April 2025 Furnished Holiday Lettings qualified as "quasi-trading" for s.152 purposes. Anti-forestalling rules between 6 March 2024 and 5 April 2025 closed artificial pre-abolition disposal routes. Post-6 April 2025, former FHL property is standard residential and does not qualify.

Standard BTL landlords cannot use s.152 rollover. The mechanism is closed to investment activity. Most landlords reading "rollover relief property" content online are working with stale or misleading information that does not engage with the s.155 Class 1 Head A "occupied AND used" requirement. Our rollover relief for landlords guide sets out the trade-versus-investment analysis with the full statute spine and case-law citations.

Section 165 holdover relief: gifts of business assets

Section 165 TCGA 1992 lets a donor defer the CGT on a gift of a "business asset" by rolling the donor's base cost across to the donee. The donee acquires at the donor's original base cost, and the deferred gain crystallises when the donee disposes to a third party.

For property investors, s.165 is narrow because the asset must be a business asset. The qualifying asset categories include shares in a personal trading company, assets used in a trade by the donor (or by the donor's personal trading company), and agricultural property qualifying for Agricultural Property Relief. Standard residential investment property does not qualify (same trade-versus-investment line as s.152). Commercial owner-occupied property used in a trade does qualify. Shares in a property development company (trading status) qualify; shares in a BTL investment SPV do not.

Where s.165 does apply (gift of trading-company shares, gift of commercial premises used in a trade), the mechanic is straightforward: the donor and donee jointly elect under s.165(4), the donee takes the donor's base cost across, and the gain on the gift is deferred. Inheritance tax considerations apply separately: the gift is potentially a Potentially Exempt Transfer (PET) for IHT purposes (taxable if the donor dies within 7 years), and the GROB rules under section 102 Finance Act 1986 can pull the asset back into the estate if the donor reserves a benefit.

Section 260 holdover relief: gifts into trust

Section 260 TCGA 1992 applies to gifts that are immediately chargeable transfers for inheritance tax purposes. The typical case is a gift of property into a relevant property trust (most discretionary trusts, most interest-in-possession trusts created after 22 March 2006). The IHT immediate-charge mechanism opens the s.260 holdover door: the trustees acquire at the donor's base cost, deferring the CGT until the trustees later dispose.

Section 260 is broader than s.165 in the asset class (any chargeable asset, not just business assets) but narrower in the receiving structure (must be a trust transfer that is an IHT chargeable transfer). A direct gift of a BTL to a discretionary trust qualifies for s.260 holdover; a direct gift of the same BTL to an adult child does not (because it is a PET, not an immediately chargeable transfer, and not a business asset for s.165).

The s.169B block on settlor-interested trusts

Section 169B TCGA 1992 blocks s.260 holdover where the trust is settlor-interested (broadly, where the settlor or the settlor's spouse / civil partner / minor children can benefit). The block exists because the settlor-interested structure was being used to defer CGT artificially without giving up family control of the asset. Where s.169B applies, the trustees acquire the property at full market value and the donor's CGT gain crystallises on the gift.

The Wave 6 settlor-interested trust guide covers the s.169B mechanics in depth. Practical takeaway: any property settlement on trust that contemplates s.260 holdover needs the settlor-interested analysis done first; the holdover does not work if the settlor's family can benefit.

The GROB trap and POAT

Section 102 Finance Act 1986 treats gifts where the donor continues to benefit as gifts with reservation of benefit (GROB) for IHT purposes. The classic case is the parent gifting the family home but continuing to live in it rent-free. The CGT s.260 holdover (or s.165 where applicable) works on the gift; the IHT GROB rules pull the property back into the donor's estate. Pre-Owned Asset Tax (POAT) under Finance Act 2004 Sch 15 is a parallel anti-avoidance regime catching similar fact patterns where the donor pays an income-tax-shaped charge based on the rental value of the retained benefit. Both GROB and POAT are IHT-side problems that do not undo the CGT deferral, but they significantly weaken the estate-planning value of the gift.

Section 162 incorporation relief: the portfolio-landlord route

Section 162 TCGA 1992 incorporation relief is the most commonly applicable deferral route for portfolio landlords. The mechanic transfers the property business (not just a single property) to a company in exchange for shares, and rolls the CGT gain into the shares' base cost. The relief is automatic where the conditions are met; no election is required.

The going-concern test

The transferring landlord must be transferring a business as a going concern, not just a collection of investment properties. HMRC case law and Statement of Practice SP D12 set out the test, with the leading authority being Ramsay v HMRC [2013] UKUT 226 (TCC) which established that active management of the portfolio at a "business" level is the qualifying threshold for a residential property portfolio to be a "business" for s.162 purposes. Single-property landlords and passive small portfolios do not typically qualify. Active multi-property landlords with management responsibility for tenancies, repairs, lettings and renewals typically do.

The mechanic

On the s.162 incorporation:

The properties and the business liabilities transfer to the company at market value.
The chargeable gain that would otherwise arise on the transfer is computed.
The relief rolls the gain into the base cost of the shares issued to the transferring landlord. The shares' base cost is therefore (market value of the business minus the rolled-over gain).
SDLT applies to the transfer of the property into the company (with the partnership-relief route under Sch 15 FA 2003 available where the business was operated as a partnership; otherwise SDLT at standard residential rates including the additional dwellings surcharge).
The deferred gain crystallises when the shareholder later disposes of the shares. It does not crystallise when the company later disposes of the underlying property.

The full incorporation sequence (SDLT planning, MDR availability, the partnership route, the post-incorporation extraction strategy) is in the BTL limited company complete guide and the dedicated incorporation CGT calculation page.

Pre-sale spouse transfer: s.58 as a deferral-shaped lever

Section 58 TCGA 1992 treats transfers between spouses or civil partners living together as no-gain-no-loss disposals. The receiving spouse takes over the original base cost. Technically this is a transfer not a deferral, but in practice it functions as a deferral-shaped lever where the receiving spouse holds the asset for some time before disposing to a third party.

The planning value sits in two places: the receiving spouse's £3,000 AEA is preserved (joint ownership effectively doubles the AEA on a future joint disposal), and the receiving spouse's basic-rate band can absorb some of the gain at 18% rather than 24%. A pre-sale transfer of a 50% beneficial share to a basic-rate-spouse can therefore save up to (£50,270 minus their other income) at the rate gap of 6 percentage points, plus an additional £3,000 of AEA absorbed.

The transfer must be a genuine transfer of beneficial ownership before the sale; HMRC will look through arrangements that lack commercial substance. Full s.58 mechanics including the genuine-transfer requirement and the declaration-of-trust evidence base are in the spouse transfer guide. Important note: s.58 does NOT transfer a carried-forward capital loss across (a claimed loss stays on the transferring spouse's record). For the loss side, see the capital losses guide.

Timing as quasi-deferral: tax-year straddle and AEA stacking

Timing the disposal across a 5 April tax-year boundary is not a formal deferral mechanic but achieves a similar cash-flow outcome. Exchanging contracts in March and completing in April (subject to the parties agreeing the completion date for non-tax reasons) puts the disposal in the later tax year, deferring the CGT payment from the upcoming 60-day window to a later 60-day window, and giving access to a fresh £3,000 AEA. The 60-day clock runs from the completion date, not the exchange date.

The tax-year straddle works best where (a) the seller has discretion over the completion date, (b) the buyer agrees, and (c) the seller's tax-year income profile differs meaningfully between the two years (so part of the gain can be timed into a basic-rate-band year). Conditional contracts can be used to a similar effect where the deferral is more material; see the relevant timing-strategy discussion in the reduce CGT guide.

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Comparing the four deferral routes

Route	Statute	Eligible disposal	Eligible reinvestment	Cash-out moment
EIS deferral	Sch 5B TCGA 1992	Any chargeable gain (including standard BTL)	Qualifying EIS shares within 12-months-before to 36-months-after window	Disposal of EIS shares (or extinguished at death)
Rollover	s.152 TCGA 1992	Qualifying business asset (s.155 Class 1 Head A: occupied AND used for trade)	Replacement qualifying business asset within 12-months-before to 36-months-after window	Disposal of replacement asset
Holdover (business asset gift)	s.165 TCGA 1992	Gift of business asset (trading-company shares; trading-business premises)	n/a, gain rolls into donee's base cost	Donee's disposal to a third party
Holdover (gift into trust)	s.260 TCGA 1992	Gift that is an immediate IHT chargeable transfer (most discretionary trusts)	n/a, gain rolls into trustee's base cost (blocked by s.169B for settlor-interested trusts)	Trustees' disposal to a third party
Incorporation	s.162 TCGA 1992	Transfer of an entire property business as going concern (Ramsay v HMRC threshold)	n/a, gain rolls into shares' base cost	Shareholder's disposal of shares
Spouse transfer	s.58 TCGA 1992	Inter-spouse transfer (no-gain-no-loss)	n/a, receiving spouse takes original base cost	Receiving spouse's disposal to a third party

The right route depends on the fact pattern. EIS works for any property gain regardless of asset class but carries investment risk. Rollover works only for trading-business property holdings, which excludes standard BTL. Holdover works on gift events, with s.165 narrow for property and s.260 only for trust gifts not blocked by s.169B. Incorporation works for active portfolios meeting the Ramsay business threshold. Spouse transfer is the lever for pre-sale rate-band planning.

FHL post-abolition: deferral routes that closed

The Furnished Holiday Lettings regime was abolished by Finance Act 2025 with effect from 6 April 2025. The CGT-side consequences for deferral planning:

Section 152 rollover is no longer available on post-6-April-2025 FHL property disposals. The "quasi-trading" treatment that pre-2025 FHL had under s.152 ended with the regime.
Section 165 holdover on gift is similarly closed for post-2025 FHL property gifts on the same trade-versus-investment basis.
Business Asset Disposal Relief at the former 10% rate is closed for post-5-April-2025 FHL disposals. BADR rates and the FHL position are covered in the Wave 6 FHL grandfathered claims guide.
Anti-forestalling rules between 6 March 2024 (announcement) and 5 April 2025 (abolition) closed routes that attempted to crystallise pre-abolition disposals to lock in the old regime. Pre-abolition advice given in that window needs to be reviewed against current law.

For ongoing former-FHL holdings disposed of post-5 April 2025, the available deferral routes are EIS (any gain, regardless of underlying asset class), incorporation relief (where Ramsay business threshold is met), and spouse transfer. The s.152, s.165 and former-FHL-BADR routes are closed.

Pension contributions and the rate-band squeeze

Pension contributions do not defer CGT and do not enter the chargeable-gain calculation. Where they help is on the rate-band split: a large pension contribution can reduce taxable income enough to free up basic-rate band, which is then available to absorb part of the chargeable gain at 18% rather than 24%. The arithmetic for a property landlord with £75,000 of employment income and a £100,000 chargeable gain: a £25,000 pension contribution drops taxable income to £50,000 (below the £50,270 basic-rate threshold), freeing about £270 of basic-rate-band capacity for the gain. The CGT saving is the rate gap (6 percentage points) on that £270, so about £16. The pension contribution gives 40% income tax relief on the £25,000, so £10,000 of income tax relief; the CGT saving is small in comparison. Pension contributions are an income tax planning tool with a small CGT side effect, not a CGT deferral lever.

Records, reporting and the deferred gain

Each deferral route has its own reporting mechanics:

EIS deferral: claim on the SA108 capital gains pages of the Self Assessment return for the year the deferral is taken. Retain the EIS3 certificate and subscription confirmation for the entire holding period. The deferred gain re-enters the calculation when the EIS shares are sold (or otherwise lose qualifying status).
Section 152 rollover: claim on the SA108. Retain evidence of trading status (badges-of-trade analysis, business accounts, contemporaneous documentation that the asset was occupied and used only for the trade). The deferred gain re-enters the calculation when the replacement asset is sold.
Section 165 / s.260 holdover: joint election (s.165) or holdover-on-IHT-chargeable-transfer claim (s.260) on the SA108. Retain the election and the donee's acknowledgment of the rolled-over base cost. The deferred gain re-enters the calculation when the donee disposes.
Section 162 incorporation: automatic where conditions met; no formal election required, but document the going-concern transfer on the SA108. Retain the company formation documents, the asset transfer agreement, and the share-issue paperwork. The deferred gain re-enters the calculation when the shareholder disposes of the shares.
Section 58 spouse transfer: on the SA108, both spouses report the transfer on a no-gain-no-loss basis. The receiving spouse's records show the original (transferring spouse's) base cost. Future disposal by the receiving spouse uses that base cost.

HMRC retention requirements are 22 months after the end of the tax year for non-business taxpayers and five years and 10 months for business taxpayers. For deferral claims with long horizons (EIS shares held to death, incorporation shares held for years before sale), retain the supporting documentation indefinitely while the deferred gain is live.

Future-rate context for deferred gains

A deferred gain crystallises at the rates in force in the year of crystallisation, not at the rates in force in the year of the original disposal. The arithmetic of deferral therefore depends on rate trajectories.

For 2026/27 the residential property CGT rates are 18% (basic rate) and 24% (higher rate) per the Autumn Budget 2024 settlement. The property income tax rates announced in the Autumn Budget 2024 (22% basic / 42% higher / 47% additional rate from April 2027) are scheduled subject to Finance Act 2026 receiving Royal Assent. Those rates apply to property income, not to CGT: the 18% / 24% CGT rates on residential property are not affected by the announced 2027 income-tax surcharge and remain in force through 2027/28 on current law.

Any longer-term CGT-rate change would require a separate Budget announcement. Deferral decisions on a 10+ year horizon (EIS-to-death, long-hold incorporation shares) need to factor in the rate-uncertainty risk: a deferred 24%-rate gain could crystallise at a higher or lower rate depending on future policy. Detail on the rate picture is in the CGT rates 2026/27 guide and the CGT 2027 rate-changes hedge page.

Sources and further reading

TCGA 1992 Sch 5B: Enterprise Investment Scheme deferral relief
TCGA 1992 s.152: rollover relief on replacement of business assets
TCGA 1992 s.155: qualifying classes of business asset (Class 1 Head A for property)
TCGA 1992 s.162: incorporation relief
TCGA 1992 s.165: holdover relief on gifts of business assets
TCGA 1992 s.260: holdover relief on gifts that are IHT chargeable transfers
TCGA 1992 s.58: no-gain-no-loss inter-spouse transfers
gov.uk EIS / SEIS deferred investments guidance
gov.uk Business Asset Rollover Relief
CGT on UK property complete guide
Reduce CGT on property disposal: planning levers
Rollover relief for property landlords
CGT on inter-spouse property transfers (s.58)
Gifting property to family members (holdover routes)
Capital losses on property disposal
CGT rates on residential property 2026/27
60-day CGT payment deadlines
BTL limited company complete guide
CGT calculation on incorporation
FHL post-2025 grandfathered claims
Settlor-interested trusts and the s.169B holdover block
What a specialist property accountant handles

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Frequently asked questions

Can I use EIS to defer CGT on a UK property gain?: Yes. EIS deferral relief under Schedule 5B TCGA 1992 applies to any chargeable gain regardless of the asset class that produced it. A landlord disposing of a BTL property at a gain can defer the CGT by subscribing for qualifying EIS shares within the window of 12 months before to 36 months after the disposal. The investment amount that matches the gain is the amount of CGT deferred. The deferred gain crystallises and becomes chargeable when the EIS shares are sold (or otherwise lose qualifying status). Critically, holding the EIS shares until death extinguishes the deferred gain through the CGT base-cost uplift on death, which is the planning point most often missed when explaining EIS to older landlords.
What happens to the deferred CGT if the EIS company fails?: If the EIS shares become worthless the deferred gain still crystallises but can be offset by a capital loss on the EIS shares themselves (which can usually be claimed as a negligible value claim under section 24 TCGA 1992 if the company has failed, or as a straight capital loss on disposal). Whether the loss fully covers the crystallised gain depends on the amounts: a £100,000 EIS investment that becomes worthless produces a £100,000 capital loss, which offsets the £100,000 crystallised deferred gain on a like-for-like basis. EIS income tax relief (30% of the subscription) can also be claimed as additional protection during the holding period, but it does not directly offset the deferred CGT. EIS deferral works best as a measured planning tool, not as a low-risk income tax shelter.
Does business asset rollover relief apply to standard buy-to-let property?: No, in almost all cases. Section 152 TCGA 1992 rollover relief requires both the disposed asset and the replacement asset to be qualifying business assets used in a trade. Section 155 Class 1 Head A is the relevant qualifying asset class for property: land or buildings 'occupied (as well as used) only for the purposes of the trade'. Standard residential letting is settled as investment activity, not a trade (Salisbury House Estates v Fry [1930] is the leading authority on this). Property developers, owner-occupiers of trading premises, and pre-6-April-2025 furnished holiday lettings could qualify; standard BTL landlords cannot. Our <a href="/blog/capital-gains-tax/rollover-relief-property-landlords">rollover relief for landlords guide</a> sets out the trade-versus-investment test and the case-law spine in detail.
Can transferring property to a spouse before sale defer CGT?: Section 58 TCGA 1992 treats inter-spouse and civil partner transfers as no-gain-no-loss disposals. The receiving spouse takes the original base cost across, which defers the gain on the transferred share until that spouse disposes to a third party. This is technically a transfer not a deferral, but in practice it can shift a future gain into a tax year and a tax rate that work better (the receiving spouse's basic-rate band, their own £3,000 annual exempt amount). It does not move an existing carried-forward capital loss across. For full s.58 mechanics see our <a href="/blog/capital-gains-tax/cgt-property-transfer-spouse">spouse transfer guide</a>.
What is the difference between CGT deferral and CGT reduction?: Deferral pushes the tax point into the future. Reduction shrinks the chargeable gain (or extinguishes it). EIS Sch 5B, section 152 rollover, section 165 / section 260 holdover and section 162 incorporation relief are deferral mechanisms: the gain still exists in the system, attached to a different asset or a future event, and crystallises when the deferred-gain event happens. Private Residence Relief, the £3,000 annual exempt amount, and capital losses are reduction mechanisms: they shrink the chargeable gain at the point of disposal. The two work together: most actual planning combines a reduction lever (PRR, AEA-stacking via spouse split, capital loss offset) with a deferral lever where the residual gain is still material. Our <a href="/blog/capital-gains-tax/reduce-cgt-property-disposal-uk">reduce CGT on property disposal guide</a> covers the reduction side.
Can I claim incorporation relief on a portfolio of buy-to-let properties?: Section 162 TCGA 1992 incorporation relief is the most commonly applicable deferral route for portfolio landlords. The mechanic transfers the property business (not just a single property) to a company in exchange for shares, and rolls the CGT gain into the shares' base cost. The relief is automatic where the conditions are met: the transfer is of a business as a going concern (HMRC case law and Statement of Practice SP D12 set out the test, with active management of the portfolio at a level meeting the Ramsay v HMRC [2013] threshold typically required), the consideration is wholly or partly shares in the company, and the assets transferred amount to the whole business. The deferred gain crystallises when the shareholder later disposes of the shares (not when the company later disposes of the property). The base cost of the shares is reduced by the rolled-over gain. SDLT and CGT interact on incorporation: see our <a href="/blog/incorporation-and-company-structures/buy-to-let-limited-company-complete-guide-uk">BTL limited company guide</a> for the full incorporation sequence including the SDLT partnership-relief route and the multiple dwellings relief position.
Does the s.169B holdover block affect EIS or rollover deferral routes?: No. Section 169B TCGA 1992 is specifically a holdover block: it prevents section 260 holdover relief on transfers into settlor-interested trusts and certain other related-party trust structures. The block does not affect section 152 rollover, section 165 holdover-on-gift-of-business-assets, or Sch 5B EIS deferral. Those four routes (EIS, s.152, s.165, s.260) have separate statutory frameworks. The s.169B block matters specifically when planning a property settlement on trust where the settlor or their family retain an interest, which is a narrow scenario. Our Wave 6 <a href="/blog/capital-gains-tax/settlor-interested-trust-iht-s49-1a-cgt-s169b-property-attribution-rules">settlor-interested trust guide</a> covers the s.169B mechanics in depth.
What is the gifts-with-reservation-of-benefit (GROB) trap when gifting property?: Section 102 Finance Act 1986 treats a gift as a 'gift with reservation of benefit' (GROB) for inheritance tax purposes where the donor continues to benefit from the asset after the gift. The classic property case is a parent gifting their home to an adult child while continuing to live in it rent-free. The transfer is a valid disposal for CGT (potentially eligible for s.165 holdover if it's a business asset, or s.260 holdover if into trust), but for IHT the property remains in the donor's estate until the reservation ceases. The CGT deferral works; the IHT planning does not. The GROB trap also catches arrangements where the donor 'rents back' at below market rent. Pre-Owned Asset Tax (POAT) is a parallel anti-avoidance regime that can apply to the same fact patterns. Anyone using a CGT deferral route on a gift to family should treat the IHT GROB and POAT angles as the separate planning question they are.
Can a former FHL disposal in 2025/26 or 2026/27 still use rollover relief?: Only in narrow circumstances. The Furnished Holiday Lettings (FHL) regime was abolished by Finance Act 2025 with effect from 6 April 2025. Pre-6-April-2025 FHL businesses could potentially qualify for rollover relief on disposal of qualifying business assets (because FHL was a 'quasi-trading' regime for limited purposes). Anti-forestalling rules between the 6 March 2024 announcement and the 5 April 2025 abolition closed routes that attempted to crystallise pre-abolition disposals artificially. From 6 April 2025, former FHL properties are taxed as standard residential rental property, which is investment activity, which does not qualify for s.152 rollover. The grandfathered position for pre-2025 BADR claims is covered in our Wave 6 <a href="/blog/capital-gains-tax/fhl-capital-allowances-post-april-2025-grandfathered-claims-mechanics">FHL grandfathered claims guide</a>.
What is the 12-month-before / 36-month-after window for EIS deferral?: Schedule 5B TCGA 1992 requires the EIS share subscription to fall in a window that opens 12 months before the disposal date that produced the gain and closes 36 months after that disposal date. So a property gain crystallising on 1 June 2026 can be deferred by an EIS subscription dated between 1 June 2025 and 1 June 2029. The amount of CGT deferred is the lower of (a) the EIS subscription amount and (b) the chargeable gain. If the EIS investment is smaller than the gain, only that proportional share of the gain is deferred. The EIS shares must be held for at least 3 years (and the company must maintain its EIS qualifying status throughout that period) for the deferral to stick. Early disposal of the EIS shares within 3 years crystallises the deferred gain on top of any gain or loss on the EIS shares themselves.
Does the death-uplift forgive a deferred EIS gain?: Yes, and this is the most powerful EIS deferral feature for older property investors. Section 62 TCGA 1992 deems all chargeable assets to be acquired at market value on the date of death (the CGT 'free uplift' on death). The deferred gain attached to the EIS shares is extinguished if the EIS shares are still held at death: there is no chargeable event triggering crystallisation, and the deceased's personal representatives acquire the EIS shares at probate-value with the deferred gain extinguished. The effect is that a 70-year-old landlord disposing of a BTL at a £500,000 gain, subscribing for £500,000 of EIS shares, holding for 10 years and dying still holding, has effectively extinguished the £500,000 CGT entirely. This planning works only if the EIS shares are held until death; selling them earlier crystallises the deferred gain in the normal way.
Can a non-UK resident landlord use EIS deferral on a UK property gain?: Non-UK residents pay UK CGT on UK residential property disposals under the Non-Resident CGT (NRCGT) regime (see our <a href="/blog/capital-gains-tax/non-resident-cgt-uk-property-rates-reporting">NRCGT guide</a>). Schedule 5B TCGA 1992 EIS deferral relief is technically available to non-UK residents who acquire qualifying EIS shares, but the practical complications are significant: the EIS income tax relief (30%) requires UK tax liability to set against, which most non-residents do not have; the EIS company must be a UK qualifying trading company; and the deferred gain crystallises when the non-resident sells the EIS shares, at which point UK CGT may still apply. For most non-UK resident landlords, EIS deferral is not the primary planning route. Spouse-share planning (s.58) where one spouse is UK resident, or holding-and-selling-after-becoming-non-resident-of-the-EIS-company-not-the-shares analysis, are the more usual planning routes. Specialist advice is strongly recommended.
How does s.162 incorporation relief differ from s.165 holdover?: Both defer the CGT, but on different fact patterns. Section 162 incorporation relief is automatic where the transfer of an entire business to a company in exchange for shares meets the going-concern conditions: the property business becomes the company's, the CGT gain rolls into the shares' base cost, and the gain crystallises when the shareholder disposes of the shares. Section 165 holdover requires an election (not automatic), applies to a gift of a business asset (not a sale, and not a transfer for full consideration), and rolls the donor's base cost across to the donee, with the gain crystallising when the donee disposes. The two reliefs apply to very different events: incorporation versus gift. Both share the underlying mechanic of pushing the gain into the future, but the structural choices and the qualifying conditions are distinct. For property investors, s.162 is the typical incorporation route and s.165 is rarely available (because residential rental is not a 'business' in the trading sense that s.165 requires).
What records do I need to support an EIS deferral claim?: EIS3 certificate from the issuing company (this is the document that establishes the shares as qualifying EIS shares), the subscription confirmation showing the date of share issue, the disposal documents for the property producing the deferred gain (sale contract, completion statement, CGT computation), and the EIS deferral claim itself on the SA108 capital gains pages of the Self Assessment return for the year of the EIS subscription. Retain the EIS3 certificate and the subscription confirmation for the entire holding period (potentially decades) because the documents will be needed if and when the deferred gain crystallises. HMRC standard retention is at least 22 months after the end of the tax year for non-business taxpayers and five years and 10 months for business taxpayers; for EIS deferrals retain indefinitely while the deferral is live.

CGT Deferral for UK Property Investors: 2026/27 Mechanics Guide

Deferral versus reduction: what each does

EIS deferral relief: Schedule 5B TCGA 1992

The mechanic

The death-uplift planning point

Worked illustration

The risks

Section 152 rollover relief: closed to standard BTL

Section 165 holdover relief: gifts of business assets

Section 260 holdover relief: gifts into trust

The s.169B block on settlor-interested trusts

The GROB trap and POAT

Section 162 incorporation relief: the portfolio-landlord route

The going-concern test

The mechanic

Pre-sale spouse transfer: s.58 as a deferral-shaped lever

Timing as quasi-deferral: tax-year straddle and AEA stacking

Want this checked against your specific situation?

Comparing the four deferral routes

FHL post-abolition: deferral routes that closed

Pension contributions and the rate-band squeeze

Records, reporting and the deferred gain

Future-rate context for deferred gains

Sources and further reading

Selling a property? Get the CGT position checked first

Frequently asked questions

Claiming a Capital Loss on a UK Property Sale: 2026/27 Landlord Guide

Lettings Relief in 2026/27: Post-2020 Rules, £40k Cap, Shared Occupation

Principal Private Residence Relief for Landlords: 2026/27 UK Guide

Deferral versus reduction: what each does

EIS deferral relief: Schedule 5B TCGA 1992

The mechanic

The death-uplift planning point

Worked illustration

The risks

Section 152 rollover relief: closed to standard BTL

Section 165 holdover relief: gifts of business assets

Section 260 holdover relief: gifts into trust

The s.169B block on settlor-interested trusts

The GROB trap and POAT

Section 162 incorporation relief: the portfolio-landlord route

The going-concern test

The mechanic

Pre-sale spouse transfer: s.58 as a deferral-shaped lever

Timing as quasi-deferral: tax-year straddle and AEA stacking

Want this checked against your specific situation?

Comparing the four deferral routes

FHL post-abolition: deferral routes that closed

Pension contributions and the rate-band squeeze

Records, reporting and the deferred gain

Future-rate context for deferred gains

Sources and further reading

Selling a property? Get the CGT position checked first

Frequently asked questions

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Claiming a Capital Loss on a UK Property Sale: 2026/27 Landlord Guide

Lettings Relief in 2026/27: Post-2020 Rules, £40k Cap, Shared Occupation

Principal Private Residence Relief for Landlords: 2026/27 UK Guide