Miscellaneous | Transferring Shares To A Spouse - A CGT Question

4th Jun by BenHazz

10 comments 333 reads

Hi All,

With the recent bull run I have managed to accrue some tidy gains in the past few months. Typically, the majority of my top performing shares are held in my Share Dealing account as opposed to my ISA account. I am looking at ways that I can avoid paying CGT if I was to sell those shares, particularly as I am already at the 3k limit and its only June. It is really limiting my flexibility to move in and out of positions.

My wife and I both have accounts with IG. She only holds shares in her ISA account, where as I have both an ISA and Share dealing account.

I have read that it is possible to complete an internal stock transfer form to transfer my shares to my wife, in doing so avoiding any CGT that I would normally have to pay. For context the sum of the gains in my Share Dealing account are around 30k.

I imagine within the community there will be a number of people who have done this before. Is there anything I need to be wary of when carrying out this process, are there any downsides. It seems almost too good to be true and I don't want to get stung with a hefty tax bill due to making a silly mistake.

Many thanks in advance,

BenHazz

Unlock with Email

Unlock with Google

Already have an account?
Login here

Aysgarth

4th Jun

I'm no expert but I think if you transfer shares to a spouse they are transferred at the original purchase price not the current price therefore any CGT to be paid when sold simply transfers to your spouse. This only helps if your spouse has unused CGT allowance. It also would not be possible to transfer the shares into your wife's ISA account, she would have to open a regular account as far as I know. There will be others here with a better understanding who will be able to confirm or deny this.

rmillaree

i would always check the detail - seems pretty strightforward though in that your assumption appears to be correct text below from hs281 confirms basic principles - i would always say ensure you check rules thoroughly before proceeding - i have linked hmrc manual

so the only issue is likely to be with regard to practiocalities i suspect many providers may not offer this service. You selling top broker and her buying from broker would almost certainly not cut the mustard.

Dont forget that you may be storing up latent gains here for your spouse if she nees to sell and has automatic gains - ie its not a complete free lunch here as the unrealised gain still exists and is transferred to her!

https://www.gov.uk/government/...

https://www.gov.uk/hmrc-intern...

per hs281
If you and your spouse or civil partner are living together, any transfer of an asset between you is treated as giving rise to neither a gain nor a loss to the person transferring it. Any amount actually paid is ignored. If the person receiving the asset later disposes of it, they will be treated as if they had paid an amount equal to the total of your costs.

The lesson here is that such planning and use of spouse/sipp/pesnion option at early stage can minimise issues later on - i suspect now the limit is down to 3k people are less likely to fall in trap of thinking well that wont apply to me.

Willinvest

My understanding is along the lines of the replies below: If you gift the shares to your wife, if she sold, she would be liable to the difference between the acquisition cost (she would acquire your acquisition cost) and her disposal cost. If she sold this year then 3k of her gains would be potentially exempt but there is more of an advantage if she is a lower rate tax payer (and any gain did not take her into a higher band), or better still if she has no other income and so would pay a lower rate of CGT (assuming you are a more than a basic rate tax payer).

I have both an investment account in my sole name and also a joint investment account with my wife with Interactive Investor. II make it easy to gift shares on line between the accounts and in the past it has been of benefit for me to gift shares in this way (although it does complicate my wife's tax return which she doesn't thank me for!)

With a potential change of government there may be significant changes to the taxation of gains and it is unlikely that the rate will go lower, so there maybe a case for realising any gains sooner rather than later. There was certainly more potential benefit with such transfers when the allowance was higher.

Thank you for this clarification - It did seem a bit too good to be true that it would somehow wipe any gains off the table. But as I am in a situation where she is a low end tax payer so would only be taxed 10%, that is a big advantage in addition to the extra 3k allowance. Crazy to think it was 12k+ only a few years ago!

My other option is that I am moving to live in Qatar this year and after that will likely move to Canada. From what I can see on the government website, this might make me exempt from paying any tax on the shares provided I don't return to the UK within 5 years of selling them. But I need to check the small print on that one!

Rusty2

I believe if you move abroad, you can't add anymore funds to your ISAs, but again check this out.

Hi Rusty,

That is correct, I would be unable to add to a UK ISA during the time overseas, however I can keep it open and continue to trade within it. That isn't ideal of course. The upside would be I could sell the shares in a share dealing account without needed to pay any CGT it would seem:

I will need to get this confirmed but it seems like the best option to avoid the tax implications. Better option than the spousal transfer. I'll wait until I am in a new tax year overseas and then sell to realise the gains.

Thanks for this, you are correct about the use of a SIPP earlier rather than later. I'm only 35 so it is a good time to get one sorted out in addition to my work pension.

Cheers Aysgarth, it would appear you are correct with that. On the upside she earns a lot less than me so would only need to pay 10% rather than the 20% I would have to pay.

rwh3ue

Hi Ben, this is something I have done a number of times because of the difference between my tax rates and those of my wife. My broker, HL, acts upon a request to gift the shares. Occasionally it has been in the reverse direction where she has a cgt loss which I use to offset my CGT gains.

AS others have said, the shares are transferred at the original cost, or the accumulated costs if they have been bought and sold along the way. It's always worth keeping records and copies of contract notes to prove what has occurred. One final point, HL insist that the request includes something to the effect that it is a gift and that the old owner has no title to the shares once gifted. HTH.

Thanks rwh3ue, nice to hear from someone who has experience of doing this. Thanks for taking the time to post.

Transferring shares to a spouse - A CGT question

Unlock the rest of this article with a 14 day trial

About the Author

BenHazz

10 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...