Gifting Shares to Your Spouse: How CGT and the No Gain/No Loss Rule Work

The No Gain, No Loss Rule Explained

Section 58 of the Taxation of Chargeable Gains Act 1992 provides that transfers of assets — including shares — between spouses or civil partners who are living together take place on a "no gain, no loss" basis. In practice, this means:

• No CGT is charged at the point of transfer, however much the asset has grown in value since it was originally acquired.
• The receiving spouse takes on the transferring spouse's original acquisition cost as their own base cost for any future disposal, rather than the market value at the date of the gift.
• The gain is effectively deferred, not eliminated — it will eventually be realised (and potentially taxed) when the receiving spouse sells the shares, calculated against the original, carried-over cost.

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Worked Example

Note that the entire £18,000 gain — including the £12,000 that accrued while Spouse A held the shares — is assessed against Spouse B when they eventually sell, using Spouse B's own annual CGT exempt amount and marginal tax rate.

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Why Couples Use This: Doubling Up the CGT Exempt Amount

The 2026/27 annual CGT exempt amount is £3,000 per person. A couple holding a shareholding entirely in one spouse's name can only shelter £3,000 of gains per year tax-free when they sell. By transferring part of the holding to the other spouse first (using the no gain/no loss rule), the couple can potentially realise up to £6,000 of combined gains tax-free in a single tax year — effectively doubling the usable allowance by spreading disposals across two individuals' allowances instead of one.

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Shifting Income and Gains to the Lower-Rate Taxpayer

Beyond the annual exemption, transferring shares to a spouse who pays a lower marginal rate of income tax or CGT can reduce the couple's overall tax bill on future dividends and gains, since both dividend tax and CGT rates are higher for higher and additional rate taxpayers:

A couple where one spouse is a higher-rate taxpayer and the other is a basic-rate taxpayer (or a non-taxpayer) can meaningfully reduce ongoing tax on dividend income and future gains by holding investments in the lower-rate spouse's name, using the no gain/no loss transfer rule to move existing holdings across without triggering a CGT charge on the transfer itself.

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Married Couples and Civil Partners Only

This is a strict legal requirement — the relief applies specifically to spouses and registered civil partners who are living together (broadly, not separated in circumstances likely to become permanent). It does not extend to:

• Unmarried cohabiting partners, regardless of relationship length or financial interdependence.
• Spouses who are separated and unlikely to reconcile (a specific, narrower rule applies around the tax year of separation).
• Any other family relationship (parent-child, siblings) — gifts between these are treated as disposals at market value, potentially triggering an immediate CGT liability for the person making the gift.

Couples who are not married or in a civil partnership and want similar flexibility have no equivalent CGT-free transfer mechanism available — a gift of appreciated shares between unmarried partners is a normal disposal for CGT purposes at market value.

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Practical Considerations Before Transferring

1. Confirm the transfer represents genuine change in beneficial ownership — HMRC can challenge arrangements that look like a transfer in form only, with no real change in control or benefit, particularly if shares are sold almost immediately after transfer.
2. Keep clear records of the transfer date, the original acquisition cost being carried over, and the fact the transfer was between spouses, to support the receiving spouse's base cost calculation on eventual sale.
3. Consider ISA and pension wrappers first where possible — shares held within an ISA or pension aren't subject to CGT at all, which may be a more effective long-term solution than managing CGT exemptions on general investment account holdings year by year.
4. Time transfers and subsequent sales sensibly across tax years if trying to use multiple years' worth of both spouses' annual exemptions for a larger overall gain.