Using spouse cgt allowance

gravlax

To take advantage of the annual cgt allowance if one spouse wants to sell assets with total gains over the annual cgt allowance they can gift some of the assets to their spouse so the couple can use both their allowances.

In the case of funds, etfs, stocks on a dealing platform in the name of one spouse, how does this work in practice?

a. does spouse B have to open a trading account in their own name and then spouse A does an in specie transfer to the account of spouse B for B to sell them? Do platforms do in specie transfers between spouses?

b. to avoid the need for the above will HMRC accept that spouse A draws up a letter/document for A and B to sign which states A is gifting x shares/units to B and that A will sell these on behalf on B?

c. another (preferably simple) way?

phlebas192

To keep it simple, I would just send my spouse an email along the lines of "I am gifting you X shares in Y. I will continue to hold them in my Z account on your behalf until you instruct me otherwise". When your spouse wants to sell them (nb: you have gifted the shares - it is their decision to sell, not yours!) then they could just send another email "I require you to sell my X shares in Y and transfer the proceeds to my bank account". It's fine if the bank account is a joint one with you, but the proceeds have to go to an account your spouse has free access to - it would be their cash after all, not yours.

You can go the signed document route if you prefer, but these days emails should be fine - they are time stamped so, if anything, are more definitive than documents that could be written after the fact.

One thing I would not do is in any way link the sale to the transfer which your suggested option b does come across as. That implies that it wasn't a true gift to your spouse and could potentially be challenged by HMRC. A gift requires that your spouse has full control over the shares and you have to accept when making the gift that they could choose to go against your wishes.

artyboy

phlebas192 said:

To keep it simple, I would just send my spouse an email along the lines of "I am gifting you X shares in Y. I will continue to hold them in my Z account on your behalf until you instruct me otherwise". When your spouse wants to sell them (nb: you have gifted the shares - it is their decision to sell, not yours!) then they could just send another email "I require you to sell my X shares in Y and transfer the proceeds to my bank account". It's fine if the bank account is a joint one with you, but the proceeds have to go to an account your spouse has free access to - it would be their cash after all, not yours.

You can go the signed document route if you prefer, but these days emails should be fine - they are time stamped so, if anything, are more definitive than documents that could be written after the fact.

One thing I would not do is in any way link the sale to the transfer which your suggested option b does come across as. That implies that it wasn't a true gift to your spouse and could potentially be challenged by HMRC. A gift requires that your spouse has full control over the shares and you have to accept when making the gift that they could choose to go against your wishes.

Well that's a novel idea 

Can't see it working in the slightest. Otherwise my wife would just be writing me an email saying that all the savings in her accounts were mine, and then claim she didn't need to pay any tax on the interest.

eskbanker

gravlax said:

To take advantage of the annual cgt allowance if one spouse wants to sell assets with total gains over the annual cgt allowance they can gift some of the assets to their spouse so the couple can use both their allowances.

In the case of funds, etfs, stocks on a dealing platform in the name of one spouse, how does this work in practice?

a. does spouse B have to open a trading account in their own name and then spouse A does an in specie transfer to the account of spouse B for B to sell them? Do platforms do in specie transfers between spouses?

b. to avoid the need for the above will HMRC accept that spouse A draws up a letter/document for A and B to sign which states A is gifting x shares/units to B and that A will sell these on behalf on B?

c. another (preferably simple) way?

If you have some time to kill, you might wish to read through this thread, which sought to address that question but didn't really seem to reach a clear conclusion, among all the digressions (of which I was a participant):

https://forums.moneysavingexpert.com/discussion/6490420/how-to-correctly-gift-shares-to-spouse-cgt-changes/p1

TL;DR - your option (a) would seem to be the supported route, but some believe that (b) is viable.

masonic

I might have missed it, but I am surprised there was no mention of joint investment accounts in that previous thread. Several providers offer them, and presumably they avoid the need for this sort of creative accounting.

george4064

On this note, when transferring shares between spouses (GIA to GIA), does the cost for CGT purposes get reset?

MCHMav

Alas, not. The original cost of the asset is also transferred to prevent you from avoiding paying CGT on the full gain. 

UncleK

I'm with X-O and it's extremely easy to open a separate account for 'er indoors and £18 to transfer shares into her account, which she can then sell using her CGT allowance. Piece of cake.

vacheron

I've just gifted some of my shares to my wife for this reason. In our case we both had Hargreaves Lansdown trading accounts. 

All I had to do was send HL a secure message stating her client number and the shares I wanted to transfer. They also require you to confirm in the message that the stock is being gifted, and that you understand you'll have no further claim to it once it’s transferred.

They did this for me in 2 days, no trouble, no charge!   



I love the idea of being able to avoid this by just writing letters to each other laying claim to large chunks of each others investments, however I doubt that HMRC would be convinced. 

And as others have said, your spouse will inherit the shares at the price you originally paid for them, not the price on they day of transfer (as you haven't sold them, you haven't crystalised any of the gain). 

In my case, my intention is to sell enough shares in her name to use up her £3K CGT allowance and also the remainder of her 10% CGT band. 

If however, CGT does not rise in the budget, and / or the allowance isn't abolished, we will buy the same shares back into her account within 30 days meaning no CGT will be payable under the bed and breakfast rules. 👍

LHW99

If however, CGT does not rise in the budget, and / or the allowance isn't abolished, we will buy the same shares back into her account within 30 days meaning no CGT will be payable under the bed and breakfast rules. 👍

I don't think it is within 30 days, my understanding is you have to wait for 30 days before you re-purchase, ie from day 31 on?

eskbanker

LHW99 said:

If however, CGT does not rise in the budget, and / or the allowance isn't abolished, we will buy the same shares back into her account within 30 days meaning no CGT will be payable under the bed and breakfast rules. 👍

I don't think it is within 30 days, my understanding is you have to wait for 30 days before you re-purchase, ie from day 31 on?

That's if you wish to create a CGT disposal, but AIUI the point being made was that the CGT disposal is being provisionally set up but can be reversed if any changes to the regime aren't to the poster's liking, by repurchasing within the 30 day window.