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Where Taxpayers and Advisers Meet

Gifting shares to spouse - does buying more shares in next 30 days affect cost?

1640100251
Posts:4
Joined:Tue Dec 21, 2021 4:25 pm
Gifting shares to spouse - does buying more shares in next 30 days affect cost?

Postby 1640100251 » Tue Dec 21, 2021 4:47 pm

I'm familiar with HMRC's share identification rules, and how they affect the sale of shares. If I sell some shares, any shares of the same class I acquire in the following 30 days would impact the cost of that disposal.

Do the same rules apply when the disposal is not a sale, but a 'no gain, no loss' gift of shares to a spouse?

For example: Consider a husband giving 10 shares to his wife. His existing Section 104 holding for that share class contains 10 shares, purchased at £100 each. The base cost of the gift would be £1000. If a few days later the husband buys a further 2 shares at £200 each, does the base cost of the earlier gift increase to £1200? (8 × £100 + 2 × £200).

An answer (https://community.hmrc.gov.uk/customerforums/sa/d67e6590-8e94-eb11-89ee-00155d3bc882) on the HMRC Community Forums suggests that this subsequent acquisition doesn't alter the wife's base cost, but does alter the huband's base cost when calculating the capital gains. This feels counterintuitive to me, since a loss will arise for the husband - on what is supposedly a 'no gain, no loss' transaction.

Thanks for any advice!

bd6759
Posts:3745
Joined:Sat Feb 01, 2014 3:26 pm

Re: Gifting shares to spouse - does buying more shares in next 30 days affect cost?

Postby bd6759 » Wed Dec 22, 2021 1:24 am

Both are treated as if the consideration given is an amount that gives no gain and no loss to the person disposing the asset. A relevant addition to the pool will affect that amount, and it applies to both.


https://www.legislation.gov.uk/ukpga/1992/12/section/58

1640100251
Posts:4
Joined:Tue Dec 21, 2021 4:25 pm

Re: Gifting shares to spouse - does buying more shares in next 30 days affect cost?

Postby 1640100251 » Wed Dec 22, 2021 12:18 pm

Thanks - that matches my expectation.

I'm still struggling to interpret the answers posted by 'HMRC Admin 17' on that thread I linked, which seems to say something quite different.

1640100251
Posts:4
Joined:Tue Dec 21, 2021 4:25 pm

Re: Gifting shares to spouse - does buying more shares in next 30 days affect cost?

Postby 1640100251 » Wed Dec 22, 2021 1:07 pm

A relevant addition to the pool will affect that amount
To double check, in the example I posed, I don't think the subsequent acquisition of the 2 shares by the husband would strictly be considered an addition 'to the pool', would it? ie. Those shares would be matched with 2 of the earlier gifted shares (B&B rule), and so never impact the husband's Section 104 holding.

bd6759
Posts:3745
Joined:Sat Feb 01, 2014 3:26 pm

Re: Gifting shares to spouse - does buying more shares in next 30 days affect cost?

Postby bd6759 » Wed Dec 22, 2021 7:32 pm

HMRC 17 also said that the wife would inherit the husbands base cost. That was corrected in the second post with a better explanation of the law, but has replaced “in any year of assessment” with “on the date of the disposal.”

S58 is all about the deemed consideration “paid”, not the deemed amount received. It is written from the point of view of the recipient. S58 seems pretty clear that the amount paid by the recipient is the amount that will give rise to no gain or loss to the disposer. That requires a look at the CGT computation of the husband, determined in accordance with the rules.

I disagree with HMRC 17.

1640100251
Posts:4
Joined:Tue Dec 21, 2021 4:25 pm

Re: Gifting shares to spouse - does buying more shares in next 30 days affect cost?

Postby 1640100251 » Wed Dec 22, 2021 11:35 pm

In practice, does the 'no gain no loss' apply to the gift overall, or also to the disposals that constitute the gift?

ie. In the example of the gift of 10 shares, the share matching rules result in the gift being made up of a disposal of 2 shares from an acquisition on a future date (B&B rule), and 8 shares from the Section 104 holding. Are those two disposals themselves both 'no gain no loss'?

Or if the 'no gain no loss' is from the point of view of the recipient, and the deemed proceeds for the gift is £1200 (8 × £100 + 2 × £200), would the disposal of the 2 shares come at a loss (£1200 × 2/10 - £200 × 2 = -£160) and the disposal of remaining 8 shares from the pool comes at a gain (£1200 × 8/10 - £100 × 8 = £160)?

This clearly makes no difference to the net gain for the year, but does impact the figures entered for "Gains in the year, before losses" (Box 26) and "Losses in the year" (Box 27).


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