Is gifting shares to my spouse free of Capital Gains Tax in the UK?

Full answer

Transfers of assets, including shares, between spouses or civil partners who are living together are exempt from an immediate Capital Gains Tax charge under the 'no gain, no loss' rule. Rather than the transfer being treated as a disposal at market value (which would normally trigger CGT if the asset had risen in value), it is treated as though the receiving spouse simply steps into the giving spouse's shoes -- they acquire the shares at the same original cost and same original acquisition date as the spouse who gave them. This makes inter-spouse transfers a well-established and completely legitimate tax planning tool. The most common use is to make full use of both partners' £3,000 annual Capital Gains Tax exempt amount: rather than one spouse selling shares and using up their own £3,000 allowance on a £3,000 gain then paying tax on the rest, they can transfer some shares to their spouse first, so each spouse sells part of the holding and each uses their own annual exemption, doubling the tax-free gain to £6,000 between them. It is also useful where one spouse pays tax at a lower rate than the other -- transferring shares to a basic-rate-taxpayer spouse before sale means any gain above the annual exemption is taxed at 18% rather than 24%, a straightforward and lawful way to reduce the household's total CGT bill. The exemption only applies to spouses and civil partners who are living together; it does not apply to unmarried partners, however long-term the relationship, nor to spouses who are separated and no longer living together (the no gain, no loss treatment ends at the point of separation, though it continues for the remainder of that tax year in most circumstances). Once the receiving spouse eventually sells the shares, CGT is calculated using the original giving spouse's acquisition cost and date, so the tax liability is simply deferred to the eventual sale, not eliminated. Use the Capital Gains Tax calculator to see the potential saving from splitting a gain between spouses.

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More answers

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