Answers · UK 2025/26
How does the bed-and-spouse CGT strategy work in the UK?
Bed-and-spouse involves selling an asset to crystallise a capital gain or loss, then having your spouse or civil partner buy it back. Because spouses are separate taxpayers, the 30-day bed-and-breakfast anti-avoidance rule does not apply between them. Both partners can use their £3,000 annual CGT allowance.
Full answer
The bed-and-spouse strategy is a legitimate CGT planning technique that exploits the fact that transfers between spouses and civil partners are made at no gain/no loss, while disposals to third parties (including a spouse re-buying in the open market) are treated at market value for the purchaser. **The basic strategy** 1. Spouse A sells an asset (e.g. shares) to a third party (or on a stock exchange) realising a gain up to their £3,000 Annual Exempt Amount (AEA) for 2026/27. 2. Spouse B immediately buys the same asset in their own name. Spouse B now has a new, higher cost base equal to the current market price. 3. If Spouse A still has remaining AEA, both partners hold the asset and both can use their own £3,000 AEA in future disposals. **Why it bypasses the 30-day rule** The 'bed-and-breakfast' anti-avoidance rule (Section 106A TCGA 1992) says that if you sell shares and rebuy the same shares within 30 days, the gain is calculated against the cost of the reacquired shares (neutralising the crystallisation). However, this rule applies to repurchases by the same person. A spouse re-buying is a different taxpayer, so the 30-day rule does not apply. **Practical uses** - Crystallising gains each year to use the AEA (use-it-or-lose-it). - Moving assets to a lower-rate taxpayer (basic-rate spouse pays 18% vs higher-rate 24% on shares). - Creating a higher base cost in a spouse's name to reduce future CGT. **CGT rates for 2026/27 (non-residential)** - Basic rate: 18%. - Higher/additional rate: 24%. - AEA: £3,000 per person. **Risks and limits** - Stamp Duty Reserve Tax (0.5%) applies on share repurchases above £1,000. - The strategy requires genuine open-market sales, not informal agreements. - HMRC could challenge arrangements that are purely artificial with no commercial substance under general anti-avoidance principles.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.