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Where Taxpayers and Advisers Meet

Gift of shares to spouse, CGT on sale, 2018-19

DavW
Posts: 2
Joined: Thu May 17, 2018 6:19 pm

Gift of shares to spouse, CGT on sale, 2018-19

Postby DavW » Thu May 17, 2018 6:47 pm

Advice on several taxation web sites states that it is possible to take advantage of a spouse's unused CGT allowance by making a gift of shares to the spouse. It must be a genuine gift and no tax is payable on the gift itself. The receiving spouse is treated as if he/she bought the shares for the price, and at the time, that the other spouse did. No problem there.

However, I read somewhere (forget where) that if the shares are gifted with the sole intention of selling them to avoid CGT, HMRC could attribute the full value of the final disposal to the spouse who made the gift.

This is rarely mentioned. Any truth in it? Does it apply where the shares are sold very soon after gifting?

AGoodman
Posts: 383
Joined: Fri May 16, 2014 3:47 pm

Re: Gift of shares to spouse, CGT on sale, 2018-19

Postby AGoodman » Mon May 21, 2018 11:38 am

Not something I've heard of. I suspect it is only really a risk if the cash proceeds found their way back to the original owner. HMRC could then (fairly legitimately) argue that the spouse was only selling as their nominee/agent.

someone
Posts: 316
Joined: Mon Feb 13, 2017 10:09 am

Re: Gift of shares to spouse, CGT on sale, 2018-19

Postby someone » Mon May 21, 2018 2:45 pm

I think the sites are referring to 'the ramsay principle'

Wikipedia has some info. I have no idea whether a gift to a spouse immediately followed by a sale would be caught or not. I would assume not as a gift is a real commercial transaction.

maths
Posts: 7340
Joined: Wed Aug 06, 2008 3:25 pm

Re: Gift of shares to spouse, CGT on sale, 2018-19

Postby maths » Thu May 24, 2018 7:39 pm

The receiving spouse is treated as if he/she bought the shares for the price, and at the time, that the other spouse did.
This is incorrect. Transfers between spouses are disposals and occur at the date of the disposal. However, it is true that the transfers takes place at no gain/loss to the transferor.

So long as the inter-spouse transfer occurs correctly any subsequent disposal by the transferee spouse will be a disposal by that transferee irrespective of the rational behind the transfer.

It would fail only if the transfer was not carried out correctly.

DavW
Posts: 2
Joined: Thu May 17, 2018 6:19 pm

Re: Gift of shares to spouse, CGT on sale, 2018-19

Postby DavW » Tue May 29, 2018 2:36 pm

Many thanks everybody.


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