Gifted shares (pedantic maths!)
TwistedHelix
Posts: 7 Forumite
in Cutting tax
Hi all,
I can see 3+ ways the taxman could represent this...Here goes.
I got shares pre marriage in 2013, not work based, just me self researching and bought them. Lets say they have gone up in value considerably.
So, as a close example. £3,000 paid (before marriage), now worth £30,000 (I am now married).
If I gift my wife ~£11,700 of shares and she sells them immediately, does that have any illegal tax implications?
It's just there are so many ways to view this.
1. They cost £3000, so do I have to calculate the % of cost £11,700 worth of shares are when she sells to get "profit" figures?
2. They increased BEFORE being gifted in my account so gifting them does not allow a CGT share of £11.7k each.
3. Your spouses CGT only kicks in on profits from point of transfer - for example if I gift her £11,700 that is now the "cost" from her account and anything after that is then profit.
It's just I have a few other investments going smoothly and I want to know if it is best to gift shares before they rise a lot, or after they rise a lot, or if it doesn't actually matter.
Many thanks.
I can see 3+ ways the taxman could represent this...Here goes.
I got shares pre marriage in 2013, not work based, just me self researching and bought them. Lets say they have gone up in value considerably.
So, as a close example. £3,000 paid (before marriage), now worth £30,000 (I am now married).
If I gift my wife ~£11,700 of shares and she sells them immediately, does that have any illegal tax implications?
It's just there are so many ways to view this.
1. They cost £3000, so do I have to calculate the % of cost £11,700 worth of shares are when she sells to get "profit" figures?
2. They increased BEFORE being gifted in my account so gifting them does not allow a CGT share of £11.7k each.
3. Your spouses CGT only kicks in on profits from point of transfer - for example if I gift her £11,700 that is now the "cost" from her account and anything after that is then profit.
It's just I have a few other investments going smoothly and I want to know if it is best to gift shares before they rise a lot, or after they rise a lot, or if it doesn't actually matter.
Many thanks.
0
Comments
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It doesn't matter. When you gift them, she acquires your base cost, i.e. purchase price. Value at the time of gift is irrelevant. Your only issue is perhaps it's best to gift them a while before she sells them to avoid any chance of HMRC challenging it as artificial/tax avoidance (unlikely they'd try, but you never know and it's a time consuming pain in the neck to have an HMRC enquiry to deal with). Also the gift has to be real, i.e. evidenced by share transfer certificate duly signed and also reflected in the share register of the companies concerned, which also takes time. So basically, don't just decide to sell tomorrow and think you can do the paperwork etc today - allow several weeks or even months to avoid HMRC challenge.0
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Hi Pennywise.
I will get a transfer cert definitely on my side. I thought the companies register only flagged holders details etc after a 1% cutoff? Didn't know they held details for small holders.
Should I request their register proof, or would my own transfer certs be efficient?
In theory, if my wife sells sub £11,700 no paperwork is needed right as it is under CGT cutoff. Or do HMRC expect paperwork for the sake of it even if the amount owed is £0.00?
Oh I used the immediate example as a hypothetical to lessen variables of the share value increasing. Only just started 2018 tax year so got 11 months odd still for her to sell them, no rush.
Many thanks for the info, has been very helpful!0 -
TwistedHelix wrote: »Hi Pennywise.
I will get a transfer cert definitely on my side. I thought the companies register only flagged holders details etc after a 1% cutoff? Didn't know they held details for small holders.
Should I request their register proof, or would my own transfer certs be efficient?
In theory, if my wife sells sub £11,700 no paperwork is needed right as it is under CGT cutoff. Or do HMRC expect paperwork for the sake of it even if the amount owed is £0.00?
Oh I used the immediate example as a hypothetical to lessen variables of the share value increasing. Only just started 2018 tax year so got 11 months odd still for her to sell them, no rush.
Many thanks for the info, has been very helpful!
It’s not the value you sell that is taxable but the gain you have made on the sold shares, so for instance if your shares have doubled in price, you can sell twice your annual allowance without paying any tax, assuming you had no othergains that year.0 -
You can transfer £13,000 worth of shares which will have a £11,700 gain after £1,300 cost but it might be a good idea to do a transfer for slightly less if you want to avoid any CGT return for your wife as you cannot predict exactly how much the shres will sell for, you might end up making a gain of £11,800 say.0
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