Transferring shares to my wife

peterg1965

Am I permitted to transfer some shares I hold in my Hargreaves Lansdown fund and share account ( this is not an ISA) to my wife without selling and re purchasing the shares? I am a HRT payer and she is BR, so in the event of making a profit on the sale above he CGT threshold, 'we' will only pay 18% CGT instead of 28%.

Thanks

gadgetmind

Yes.

Just send them a letter saying that you are irrevocably gifting the shares to your wife and ask them to transfer them from your "Fund and Share" account to hers. Give all relevant names, account numbers, share names, and number of shares, and HL will action it very quickly IME.

peterg1965

gadgetmind wrote: »

Yes.

Just send them a letter saying that you are irrevocably gifting the shares to your wife and ask them to transfer them from your "Fund and Share" account to hers. Give all relevant names, account numbers, share names, and number of shares, and HL will action it very quickly IME.

Thank you. I'll call them tomorrow (I should have done this before) and get it sorted!

gadgetmind

Call them for confirmation, but they've always asked me to send them a letter of instruction.

peterg1965

Just looked a little deeper. I was under the impression that CGT was paid at the highest rate of income tax irrespective of the amount of Capital Gain. Seems I am wrong and that the amount of 'gain' is added to your income and if you go over the HRT threshold then CGT is payable at the 28% rate - is this correct?

Example, wife earns roughly £24k pa, if the capital gain is more than £30k (£10k CGT allowance + c£20k to take her to the HRT threshold) then she is taxed at 28% on the gain.

gadgetmind

peterg1965 wrote: »

Seems I am wrong and that the amount of 'gain' is added to your income and if you go over the HRT threshold then CGT is payable at the 28% rate - is this correct?

Yes.

You stack (in this order) earned income, savings income, dividends and gains (beyond allowances) on top of each other and then apply the relevant personal allowances and tax rates. Remember to add the notional 10% tax credit to any dividends.

Your calculation looks sane to me but remember you both get a fresh CG alllowance on April 6th so split things where possible.

Keep *very* good records of all dates and trading costs.

gadgetmind

Sorry, just to be clear, any gains (beyond allowance) within the BR band are taxed at 18% and any gains beyond that at 28%. There isn't a sudden switch to all gains being taxed at 28%.

peterg1965

gadgetmind wrote: »

Sorry, just to be clear, any gains (beyond allowance) within the BR band are taxed at 18% and any gains beyond that at 28%. There isn't a sudden switch to all gains being taxed at 28%.

Got that, thanks. All my investments are with HL so I have a record of all online dealings with them. So, I would be looking at a maximum £2000 tax saving by transfering shares to my wife (the difference between 18% and 28% CGT on the £20K she has remaining in the BR tax band).

gadgetmind

Sounds about right.

My wife has paid a fair bit of CGT at 18% but I've never been able to stomach paying 28% so just do 2 x £10.6k and her BR band every year.

BTW, I assume you're working out gains correctly and know you can deduct dealing charges? I also assume you know about section 104 holdings if relevant?

peterg1965

gadgetmind wrote: »

Sounds about right.

My wife has paid a fair bit of CGT at 18% but I've never been able to stomach paying 28% so just do 2 x £10.6k and her BR band every year.

BTW, I assume you're working out gains correctly and know you can deduct dealing charges? I also assume you know about section 104 holdings if relevant?

I am not sure I am working out gains correctly, neither am I aware of what a section 104 holding is. If/when I make a decent profit and sell my shares I will ask for help! I have been buying shares in a single company over a period of time so have bought at a variety of prices. I know my average price per share and I know that when I sell, I am going to probably sell the whole lot together at the same time!

gadgetmind

Section 104 holdings come into play when you have made purchases at various times, and you're right to keep a record of your average price. Selling the lot at once actually makes things easy as you can deduct all trading costs rather than having to pro-rata.

Basically you then do selling minus total buying minus all trading and this is your gain. You can offset losses in same year, use previous losses if declared, and various other tricks. Lots of info on the HMRC web site.

If you xfer to spouse, then their buying price is deemed to be the same as your buying price and value at time of transfer doesn't matter.