Quick CGT Qn - Transfer to Wife...
Discussion
A quick CGT question - I *think* I know the answer, but would appreciate advice...
My wife and I own a BTL property, in joint names (and has been for many years).
If I gift my half of the ownership to her, I understand there is no CGT to pay, and when she comes to sell her liability for CGT will be based on the difference between the cost when we bought it originally and the selling price?
I imagine this is a fairly well-trodden path for partners where one is a higher rate and the other a lower rate tax payer?
I can see the gov.uk advice is;
Your spouse or civil partner
You do not pay Capital Gains Tax on assets you give or sell to your husband, wife or civil partner, unless:
you separated and did not live together at all in that tax year
you gave them goods for their business to sell on
The tax year is from 6 April to 5 April the following year.
If they later sell the asset
Your spouse or civil partner may have to pay tax on any gain if they later dispose of the asset.
Their gain will be calculated on the difference in value between when you first owned the asset and when they disposed of it.
If this was before April 1982, your spouse or civil partner should work out their gain using the market value on 31 March 1982 instead.
They should keep a record of what you paid for the asset.
Are there any other liabilities we need to consider if following this path?
Thank you
My wife and I own a BTL property, in joint names (and has been for many years).
If I gift my half of the ownership to her, I understand there is no CGT to pay, and when she comes to sell her liability for CGT will be based on the difference between the cost when we bought it originally and the selling price?
I imagine this is a fairly well-trodden path for partners where one is a higher rate and the other a lower rate tax payer?
I can see the gov.uk advice is;
Your spouse or civil partner
You do not pay Capital Gains Tax on assets you give or sell to your husband, wife or civil partner, unless:
you separated and did not live together at all in that tax year
you gave them goods for their business to sell on
The tax year is from 6 April to 5 April the following year.
If they later sell the asset
Your spouse or civil partner may have to pay tax on any gain if they later dispose of the asset.
Their gain will be calculated on the difference in value between when you first owned the asset and when they disposed of it.
If this was before April 1982, your spouse or civil partner should work out their gain using the market value on 31 March 1982 instead.
They should keep a record of what you paid for the asset.
Are there any other liabilities we need to consider if following this path?
Thank you
Well yes, but don't go thinking that after, say, 10 years of joint ownership you can gift half of the property to your wife on Thursday, she can sell the whole thing on Friday and everything will be OK.
HMRC have plenty of "anti-avoidance" weaponry to defeat that sort of thing. Their big computer in the sky monitors the Land Registry and Stamp Duty so they can easily see that a step was inserted for no purpose other than reducing tax payable.
HMRC have plenty of "anti-avoidance" weaponry to defeat that sort of thing. Their big computer in the sky monitors the Land Registry and Stamp Duty so they can easily see that a step was inserted for no purpose other than reducing tax payable.
Correct re the treatment.
On anti avoidance etc, the law specifically allows transfers between spouses, and treats them as made at nil gain nil loss (S58 TCGA 1992). In law, you’re allowed to arrange your tax affairs to minimise tax paid. Anti avoidance rules, would only apply if you inserted steps into the transaction that had no commercial purpose/contrived/abnormal - if the whole proceeds pass to your wife on sale, and not back to you for example, you won’t fall foul of anti-avoidance rules.
On anti avoidance etc, the law specifically allows transfers between spouses, and treats them as made at nil gain nil loss (S58 TCGA 1992). In law, you’re allowed to arrange your tax affairs to minimise tax paid. Anti avoidance rules, would only apply if you inserted steps into the transaction that had no commercial purpose/contrived/abnormal - if the whole proceeds pass to your wife on sale, and not back to you for example, you won’t fall foul of anti-avoidance rules.
Panamax said:
Opinions differ here. I suggest OP seeks paid professional advice since the numbers are likely to be significant.
I suspect we are both professional enough to advise on this 
. Furniss won’t apply unless steps that have no commercial purpose are inserted. GAAR won’t apply for the same reasons. DOTAS is not in point and cases like Arctic are in relation to income rather than capital. My strong view is that unless the transfer is a sham, HMRC won’t challenge it, or even if they did, they wouldn’t succeed.
But by all means, OP could seek professional advice where the advisor can indemnify OP for any loss.
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