How to correctly gift shares to spouse, CGT changes

scoobyjones1

Hoenir said:

scoobyjones1 said:

eskbanker said:

scoobyjones1 said:
These vicious threshold cuts will discourage investors and savers, lose business for providers and create massive backlogs for HMRC who are already over stretched.

The only winners will be financial advisers...in the short term.

Which 'vicious threshold cuts' impact savers?

The reduced CGT and dividend allowances can obviously affect investors, although the £20K annual ISA allowance should mitigate that for all but the wealthiest, and those who have sufficient assets to engage financial advisers are arguably a more suitable population to shoulder a higher burden of taxation than those less well off....

I'm not here to argue politics and we cannot afford financial advisers. If you have a position of shares built up over many years, maybe an inheritance already subject to a lifetime of taxation then another 40% tax after death, not in a SIPP or ISA, to cut the threshold from 12k plus to 6 to 3 is vicious in my opinion. Especially when they promised not to, only 3/4 years ago. Add to that the cuts to thresholds for tax on dividends and interest from 2k to 1k to 500 and this will discourage many savers and make life more difficult. They are doing this to raise more tax revenue of course. Add in the freeze on Income Tax thresholds, pushing many more people into tax and higher rate tax, then they certainly will have a bumper take this year and even more so next. We are being taxed more than we were 70 years ago and it's all a bit under the radar for many people. You may be aware and no doubt you have planned ahead...but that's not most folk!

Then consider how badly "savers" are treated in other tax jurisdictions. They can only dream of tax free ISA's as an example.. 

Good point. ISA's have become extremely popular since these thresholds were cut. My only worry is that they may mess around with ISA allowances next...given time :-(

• January 2023 sees online Bed & ISA applications more than double year on year, up 122%
• In December 2022, online Bed and ISA applications were up 90% year on year
• In November 2022 online Bed & ISA applications rose by 72% year on year

eskbanker

scoobyjones1 said:
ISA's have become extremely popular since these thresholds were cut. My only worry is that they may mess around with ISA allowances next...given time :-(

• January 2023 sees online Bed & ISA applications more than double year on year, up 122%
• In December 2022, online Bed and ISA applications were up 90% year on year
• In November 2022 online Bed & ISA applications rose by 72% year on year

So, far from discouraging investors, the cuts have simply encouraged them to make more use of the existing tax wrappers to shelter their holdings from tax, which has consistently been recommended as good practice for years?  We're now in the seventh year of the annual ISA allowance being £20K - obviously that's not guaranteed to be cast in stone for perpetuity but make hay while the sun shines!

scoobyjones1

eskbanker said:

scoobyjones1 said:
ISA's have become extremely popular since these thresholds were cut. My only worry is that they may mess around with ISA allowances next...given time :-(

• January 2023 sees online Bed & ISA applications more than double year on year, up 122%
• In December 2022, online Bed and ISA applications were up 90% year on year
• In November 2022 online Bed & ISA applications rose by 72% year on year

So, far from discouraging investors, the cuts have simply encouraged them to make more use of the existing tax wrappers to shelter their holdings from tax, which has consistently been recommended as good practice for years?  We're now in the seventh year of the annual ISA allowance being £20K - obviously that's not guaranteed to be cast in stone for perpetuity but make hay while the sun shines!

Obviously those people were already investors, using bed and ISA's to move their assets, desperate to protect themselves from the swingeing threshold cuts. They were also desperate to use last years £12k allowance...hence the uptick in bed and ISA's and similar. 122%! When the CGT threshold is only £3k, next year, this will most definitely discourage new investors. You won't even be able to re balance and organise your portfolio without liability. 

eskbanker

scoobyjones1 said:

eskbanker said:

scoobyjones1 said:
ISA's have become extremely popular since these thresholds were cut. My only worry is that they may mess around with ISA allowances next...given time :-(

• January 2023 sees online Bed & ISA applications more than double year on year, up 122%
• In December 2022, online Bed and ISA applications were up 90% year on year
• In November 2022 online Bed & ISA applications rose by 72% year on year

So, far from discouraging investors, the cuts have simply encouraged them to make more use of the existing tax wrappers to shelter their holdings from tax, which has consistently been recommended as good practice for years?  We're now in the seventh year of the annual ISA allowance being £20K - obviously that's not guaranteed to be cast in stone for perpetuity but make hay while the sun shines!

Obviously those people were already investors, using bed and ISA's to move their assets, desperate to protect themselves from the swingeing threshold cuts. They were also desperate to use last years £12k allowance...hence the uptick in bed and ISA's and similar. 122%! When the CGT threshold is only £3k, next year, this will most definitely discourage new investors. You won't even be able to re balance and organise your portfolio without liability. 

But the point is that all investors, new and old, can shelter £20K per year from all taxation, and within that ISA wrapper they can rebalance and organise to their hearts' content.

UncleK

Going back to the nuts and bolts, my wife set up an X-O account (Jarvis Investment Management) and I transferred my shares to there. She sold them days later. Jarvis requested a letter from me saying that was a gift between spouses and that all future rights to the shares were relinquished by me and gifted to my good lady. On reflection I think that would also be good enough for HMRC, should they ever ask, innit?

scoobyjones1

UncleK said:

Going back to the nuts and bolts, my wife set up an X-O account (Jarvis Investment Management) and I transferred my shares to there. She sold them days later. Jarvis requested a letter from me saying that was a gift between spouses and that all future rights to the shares were relinquished by me and gifted to my good lady. On reflection I think that would also be good enough for HMRC, should they ever ask, innit?

Yes @UncleK , that's helpful and good for people to know. I did a similar thing...I had to accept that it was a gift and that I was handing over control of those shares to my wife (didn't need a letter though because it was from and to the same company). Now we can use her allowance and also have a 20k stocks and shares ISA in her name as well. Next tax year we both will only get a 3k allowance but we can move another 20k into each of our ISAs. I wish I had done this sooner...Jan / Feb / March 2023 would have been the best time but unfortunately I was nursing a family member through serious illness....so all financial stuff was forgotten about for a while.

IanManc

scoobyjones1 said:

eskbanker said:

scoobyjones1 said:

eskbanker said:

scoobyjones1 said:
ISA's have become extremely popular since these thresholds were cut. My only worry is that they may mess around with ISA allowances next...given time :-(

• January 2023 sees online Bed & ISA applications more than double year on year, up 122%
• In December 2022, online Bed and ISA applications were up 90% year on year
• In November 2022 online Bed & ISA applications rose by 72% year on year

So, far from discouraging investors, the cuts have simply encouraged them to make more use of the existing tax wrappers to shelter their holdings from tax, which has consistently been recommended as good practice for years?  We're now in the seventh year of the annual ISA allowance being £20K - obviously that's not guaranteed to be cast in stone for perpetuity but make hay while the sun shines!

Obviously those people were already investors, using bed and ISA's to move their assets, desperate to protect themselves from the swingeing threshold cuts. They were also desperate to use last years £12k allowance...hence the uptick in bed and ISA's and similar. 122%! When the CGT threshold is only £3k, next year, this will most definitely discourage new investors. You won't even be able to re balance and organise your portfolio without liability. 

But the point is that all investors, new and old, can shelter £20K per year from all taxation, and within that ISA wrapper they can rebalance and organise to their hearts' content.

20k? Whoop de doo!

A comment like that shows how far removed you are from the financial situation and real lives of most people in this country.

Being able to put £20k a year, every year, into an ISA is well beyond the means of the bulk of the population, and it represents a generous tax break for people with wealth.

housebuyer143

I understand why people want to avoid tax and of course i do to, but when you think about it why should money you made out of nothing be tax free? Why is this expected? 

It's richer people who just get richer by having these allowances as the poorer end of society will not have enough money to exceed them by investing in shares and earning over the tax free savings threshold.
As a matter of fairness paying tax on profits does seem just in my opinion, however upsetting it maybe. 

eskbanker

scoobyjones1 said:

20k? Whoop de doo!

scoobyjones1 said:
Now we can use her allowance and also have a 20k stocks and shares ISA in her name as well. Next tax year we both will only get a 3k allowance but we can move another 20k into each of our ISAs. I wish I had done this sooner...Jan / Feb / March 2023 would have been the best time but unfortunately I was nursing a family member through serious illness....so all financial stuff was forgotten about for a while.

£20K per person per year, for the last seven years (and smaller but not insignificant allowances before that), which should have formed a key component of any savvy investor's plans to minimise tax exposure - it's undoubtedly true that the goalposts have moved on the CGT allowance so I'm sure you're far from alone in not getting round to sheltering your investments sooner (and hence the Bed & ISA figures you quoted earlier), but the point remains that you could have done.

scoobyjones1

eskbanker said:

scoobyjones1 said:

20k? Whoop de doo!

scoobyjones1 said:
Now we can use her allowance and also have a 20k stocks and shares ISA in her name as well. Next tax year we both will only get a 3k allowance but we can move another 20k into each of our ISAs. I wish I had done this sooner...Jan / Feb / March 2023 would have been the best time but unfortunately I was nursing a family member through serious illness....so all financial stuff was forgotten about for a while.

£20K per person per year, for the last seven years (and smaller but not insignificant allowances before that), which should have formed a key component of any savvy investor's plans to minimise tax exposure - it's undoubtedly true that the goalposts have moved on the CGT allowance so I'm sure you're far from alone in not getting round to sheltering your investments sooner (and hence the Bed & ISA figures you quoted earlier), but the point remains that you could have done.

As I said in another post, this year I was busy with more important things. My Mum had cancer.

My problem with hindsight was that I trusted this Government in 2019/20 when they said that CGT allowances would be frozen until at least 2025. The situation I was in (and I am not the only one) was with old shares that had realised, some of them, 200% gains...left to accumulate for retirement at 65 (another thing they moved the goalposts on but that's another issue!) My planning was fine based on 6 years with a £12k allowance. I will be fine anyway thanks to helpful advice from kind people on here like Reed and UncleK . What is NOT helpful is to have constant arguments and patronising comments from the likes of you. I KNOW what I could have done. I was looking for a work around from here.

Many people who do have lives will not realise this CGT thing is an issue, until they do their tax returns next year and the full effect / shock will be the year after that. Not everyone has advisers working for them.

No doubt you will reply to this as well...you seem to want the last word on every thread....so go ahead.. I'm out.

Best wishes to everyone else and Merry Xmas to all.