How to use your wife s CGT allowance?

[SonicHedgeHog]

It seems that it’s possible to gift shares to your husband/wife and then sell them to take advantage of their CGT tax free allowance. I’ve found lots of information telling me what to do but nothing explaining HOW to do it. Can anyone please advise?

Edited by SonicHedgeHog on Tuesday 18th November 12:06

[Jon39]

SonicHedgeHog said:

It seems that it's possible to gift shares to your husband/wife and then sell them to take advantage of their CGT tax free allowance. I ve found lots of information telling me what to do but nothing explaining HOW to do it. Can anyone please advise?

If you have a certificate(s) for the shares that you want to transfer to your wife, then you simply need to complete a Share Transfer Form, then send it with the certificate(s) to the appropriate registrar.
I think for the value question you put GIFT, meaning no Stamp Duty is payable.
The form can be downloaded from the registrar's website, or requested from the registrar.

If you hold those shares with a broker, then I suppose you need to speak to them.

Hopefully you are making good use of (stocks and shares) ISA, then taxation need not even be thought about.

The CGT free allowance has recently been gradually reduced to now being effectively nothing and CGT is these days also charged on inflationary gains. It all points to little encouragement to have any ambition to start businesses, or achieve a better financial position.
It has been clearly shown in the past, that increasing CGT, results in fewer transactions and less money being received by the Treasury.

[CharlesElliott]

You can gift the shares, just transfer them to their ownership (ie you both need a brokerage account).

The cost basis of the shares is deemed to be your cost basis for the shares - if they cost you £1000, then they are deemed to have cost your partner £1000. (Lookup Section 104 holdings if you have multiple purchases of the same share at different prices).

Then your partner sells the shares, and they utilise their CGT allowance based on the increase above the cost basis. they need to declare the gain to HMRC.

[gotoPzero]

We did this recently via iWeb. There is a specific form you fill in to gift them over to spouse. Took about a week.

I then got a confirmation and they showed up on my account. IIRC as it was iWeb to iWeb there was no charge.

I could then sell the shares and make use of the 3k TFA.

[The Leaper]

I split a shareholding 50/50 between me and my wife several years ago when the CGT allowance was £12,300 each, so it was much more meaningful to do it then than now.

One problem was that the shares were in a USA based company and so they were traded on the NYSE, and to transfer ownership the USA based share administration company required me to complete what's called a "Medallion Signature Guarantee". It is something rarely seen in the UK and it proved a problem to find a company here to do this, but eventually I found one. The MG was surprisingly expensive!

R.

[gotoPzero]

I just had to do a W8-BEN to move some META from Mrs to me. I had done one in the past but it had expired.

[Panamax]

Some caution is called for. Yes, gifts to spouse are CGT free and the spouse takes over your base value (cost of acquisition). However, simply shunting something into spouse's name which they immediately sell can fall foul of HMRC's anti-avoidance rules. In other words, it's obvious you've inserted a step in the process (transfer to spouse) which has no purpose other than to avoid tax. This is based on a case called Ramsay v IRC (1981) where inserting an unnecessary step was found to be a sham.

If, say, you own 1,000 shares then by all means transfer them to spouse.
He/she should then own them for a while. Let's say several months as a minimum, perhaps receiving the dividends.
And then it's best if he/she doesn't just sell them all in one go but retains part of the holding until, say, the following year.

In other words it needs to be a "genuine gift to spouse" not just "selling through the spouse's name".

[Panamax]

OP - you don't need to even think about what W-8BEN means unless you've got direct holdings in USA companies. Just keep it simple.

[SonicHedgeHog]

Useful information. Thank you. Dad bought some shares a while back and didn’t use his ISA. We now need to sell them over a few years maximising the £3000 allowance. As with all things with British tax it is more complicated than first thought. Seems like we have to make the transfer and wait until the end of the tax year before selling. Bit of a PITA but good to know.

[alscar]

SonicHedgeHog said:

Useful information. Thank you. Dad bought some shares a while back and didn t use his ISA. We now need to sell them over a few years maximising the £3000 allowance. As with all things with British tax it is more complicated than first thought. Seems like we have to make the transfer and wait until the end of the tax year before selling. Bit of a PITA but good to know.

If you are transferring shares directly to either you or your spouse from your Dad that’s a bit different to you transferring shares already owned to your spouse though.
Sounds like that would in fact be 2 transfers and then despite the small amounts could leave yourself open to HMRC looking into it a bit more closely.
I stress the could element of that last sentence.

[The Leaper]

SonicHedgeHog said:

Useful information. Thank you. Dad bought some shares a while back and didn t use his ISA. We now need to sell them over a few years maximising the £3000 allowance. As with all things with British tax it is more complicated than first thought. Seems like we have to make the transfer and wait until the end of the tax year before selling. Bit of a PITA but good to know.

This is a different scenario to your original post. You now say "we now need to sell them". Who is the "we"? How does the "we" have the power to sell the shares? Your latest post reads as if your Dad has died and the shares have not been disposed of. If I am right, what does the Will say about the shares, and it's the executor's responsibility to deal with their disposal as per the Will anyway.

R.

[The Leaper]

SonicHedgeHog said:

Useful information. Thank you. Dad bought some shares a while back and didn t use his ISA. We now need to sell them over a few years maximising the £3000 allowance. As with all things with British tax it is more complicated than first thought. Seems like we have to make the transfer and wait until the end of the tax year before selling. Bit of a PITA but good to know.

This is a different scenario to your original post. You now say "we now need to sell them". Who is the "we"? How does the "we" have the power to sell the shares? Your latest post reads as if your Dad has died and the shares have not been disposed of. If I am right, what does the Will say about the shares, and it's the executor's responsibility to deal with their disposal as per the Will anyway.

R.

[SonicHedgeHog]

Calm down everybody. No one has died. We’re simply trying to make the most of mum and dad's CGT allowances without falling foul of the law. I use the word “we” because they’re 81 and it’s much easier for me to do the work with the online accounts than leave them to do it.

Based on the advice given above the plan is the gift some shares from dad to mum so that if/when they get sold they make the most of the CGT allowance. If there is a problem with this then I’m happy to listen but please don’t think this is some elaborate tax avoidance scheme. It isn’t. I’m trying to make sure I use the rules as they were intended to be used.

[alscar]

SonicHedgeHog said:

Calm down everybody. No one has died. We re simply trying to make the most of mum and dad's CGT allowances without falling foul of the law. I use the word we because they re 81 and it s much easier for me to do the work with the online accounts than leave them to do it.

Based on the advice given above the plan is the gift some shares from dad to mum so that if/when they get sold they make the most of the CGT allowance. If there is a problem with this then I m happy to listen but please don t think this is some elaborate tax avoidance scheme. It isn t. I m trying to make sure I use the rules as they were intended to be used.

Understood - if first paragraph above had been used originally might have saved a couple of posts but yes your plan makes sense.
The other thing to bear in mind is that any losses on shares can also be carried forward ( in their own manes and assuming shares then owned by them ) to offset profit from others.