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Where Taxpayers and Advisers Meet

CGT liability on gift of shares to wife

GW
Posts:22
Joined:Wed Aug 06, 2008 3:22 pm
CGT liability on gift of shares to wife

Postby GW » Mon Jun 28, 2010 12:21 pm

Hi, can anyone give me advice on a proposed gift of shareas to my wife?

I am currently a basic rate tax payer but, as a result of the changes to tax allowances in 2011/12 announced in the recent budget (and in particular the reduction in the higher rate threshold to £34,900), I am likely to pay higher rate tax on the dividends received on my modest shareholding from next year.

If I gift these shares to my wife, whose income is well below the higher rate tax threshold, so that she receives the income in the future, does this gift generate a potential CGT liability for me (asssuming, of course, that the share price at the time of the gift is greater than the acquisition price - which it isn't at the moment!)?

I'm aware that transfers of assets between husband and wife are on a "no gain/no loss" basis but I'm not sure what this means.

If I decide to proceed with the transfer, does this establish a new "base price" for CGT purposes (ie the share price at the date of transfer) - and thus a potential CGT liability for me - or is my wife deemed to have acquired the shares at the price at which I acquired them - in which case I assume that there is no CGT liability for me?

Any advice would be greatly appreciated. Thanks.

Lee Young
Posts:2697
Joined:Wed Aug 06, 2008 3:26 pm
Contact:

Re: CGT liability on gift of shares to wife

Postby Lee Young » Mon Jun 28, 2010 12:41 pm

The transfer does not cause a CGT bill, but when your wife comes to dispose of them she will have your base cost from which to calcualte the gain.
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701

GW
Posts:22
Joined:Wed Aug 06, 2008 3:22 pm

Re: CGT liability on gift of shares to wife

Postby GW » Mon Jun 28, 2010 1:03 pm

Many thanks for such a speedy and helpful response!

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Re: CGT liability on gift of shares to wife

Postby Peter D » Mon Jun 28, 2010 1:41 pm

Not sure where you get £34,900 form the threshold is £37,400 as per http://www.hmrc.gov.uk/rates/it.htm
but the personal allowance for higher rate will drop by £1000 7745 to 6745.
Regards Peter

GW
Posts:22
Joined:Wed Aug 06, 2008 3:22 pm

Re: CGT liability on gift of shares to wife

Postby GW » Mon Jun 28, 2010 2:19 pm

Peter D

Yes, the basic rate tax "band" for 2010/11 is £37,400.

According to the Telegraph last Saturday (Your Money, p2), this will drop to £34,900 from next April.

Regards.

maths
Posts:8333
Joined:Wed Aug 06, 2008 3:25 pm

Re: CGT liability on gift of shares to wife

Postby maths » Mon Jun 28, 2010 6:15 pm

but the personal allowance for higher rate will drop by £1000 7745 to 6745.
This is not correct.

The current proposal is that effective 6.4.11 the basic rate limit of £37,400 will be reduced to £34,900 for higher rate taxpayers; the personal allowance remains for such people at £7,745 (subject to the excess of £100,000 rule).

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Re: CGT liability on gift of shares to wife

Postby Peter D » Mon Jun 28, 2010 6:45 pm

Tanks Maths I missed that. Nasty.
"The basic rate limit will be reduced by £2,500 and the higher rate threshold by £1,650. The national insurance upper earnings/profit limit will also be reduced to keep it in line with the income tax higher rate threshold "

Regards Peter

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Re: CGT liability on gift of shares to wife

Postby Peter D » Mon Jun 28, 2010 9:03 pm

HMRC relly need to remove old pages from their web site, as usual. Regards Peter

Peter D
Posts:10668
Joined:Wed Aug 06, 2008 3:37 pm

Re: CGT liability on gift of shares to wife

Postby Peter D » Mon Jun 28, 2010 9:04 pm

Sorry Typo. really. Regards Peter


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