When a person gives/sells shares, investment properties etc. to a spouse, the transfer is deemed to be at a no gain/no loss value – so no CGT to pay. By transferring a half share of an investment property to your spouse prior to selling it, you can double the tax-free Capital Gain (annual exemption of £12,300 (2022/23)). Also, if you pay Higher Rate Tax (40%) and your spouse pays Income Tax at a low rate you could save some Higher Rate Income Tax by transferring shares to them.
CGT & unmarried couples
In contrast, when a person transfers shares or property to a girl/boyfriend, a Capital Gains calculation based on market value will need to be made – and CGT may be due. And valuing unlisted shares is always fairly tricky, and carries the risk of a challenge from HMRC.
CGT & divorcing couples (new rules from April 2023)
Getting married is ‘a great piece of tax planning’ (re CGT and Inheritance Tax), but getting divorced brings its own tax problems.
With effect from April 2023, the CGT benefits of marriage (transfers at no gain/no loss) now last for three years from the date of separation (from April 2023 onwards) – or for an indefinite period if part of a formal divorce agreement. After that, CGT can apply on transfers between the divorcing/separating parties – even when no actual sale takes place.
As always – seek professional advice.