CGT on jointly-owned general investment account
Discussion
Mrs Oxgreen and I have a jointly-owned General Investment account in which I am the primary account holder and she is the secondary account holder. My plan is to "bed-and-ISA" the money across into my ISA and Mrs Oxgreen's gradually over the years.
I want to avoid paying CGT when selling out of the GI account, obviously.
My question is: Am I right in assuming that I can simply add our two CGT allowances together, and provided the capital gain on the sale of £40,000 (as reported on the Fidelity web site) comes out less than a double CGT allowance, then all is well?
I have just done the sale of £40k for this tax year, and the gain is coming out a bit less than a single person's CGT allowance, so no problem this year. But next year it may breach a single person's allowance. And at some point in the future, there may come a time when I can't sell the whole of our two ISA allowances without breaching the double CGT allowance.
A supplementary question: I'm also assuming that I can perform the whole sale on behalf of both of us, or would I need to get Mrs Oxgreen to do half of the sale herself in order to use her CGT allowance?
I want to avoid paying CGT when selling out of the GI account, obviously.
My question is: Am I right in assuming that I can simply add our two CGT allowances together, and provided the capital gain on the sale of £40,000 (as reported on the Fidelity web site) comes out less than a double CGT allowance, then all is well?
I have just done the sale of £40k for this tax year, and the gain is coming out a bit less than a single person's CGT allowance, so no problem this year. But next year it may breach a single person's allowance. And at some point in the future, there may come a time when I can't sell the whole of our two ISA allowances without breaching the double CGT allowance.
A supplementary question: I'm also assuming that I can perform the whole sale on behalf of both of us, or would I need to get Mrs Oxgreen to do half of the sale herself in order to use her CGT allowance?
I think that's all correct - assuming you don't have some separate agreement that although "jointly" registered the holdings are beneficially owned, say, 25% you and 75% her and income arising has been declared/taxed on that basis. In other words you can't claim to on one basis for Income Tax and on a different basis for CGT.
CGT is of course all levied on a self-assessment basis at the individual level.
Problems could/would arise if either of you were unable to explain the source of the proceeds of a material asset sale and/or demonstrate the correct the application of the 'base cost' as per the share matching rules...
If you have sold assets that were held in a jointly-held GIA and the proceeds were paid into a jointly held current account, you have presumably opened (or added to) your own individual ISA accounts (as ISA accounts are never jointly held).
If the proceeds have all ended up in one of your individual bank accounts, it could complicate the optics...
If you want to raise another £40k, you'll only need to wait until 06 April to repeat the exercise but a new CGT base cost exercise will be required (on whatever it is that you choose to sell at that point).
You might want to inquire as to whether or not the provider will accept instructions from you (presumably jointly) to sell your jointly-held assets and distribute the proceeds (50:50?) to your individual bank accounts (if you have them)?
In summary, if you are confident that your individual share of the gain is below the £12,300 (each) allowance and that the total transaction value is less than 4x (ie. less than £49,200 each), there will be no CGT reporting obligation, but always helpful to keep clear records just in case anyone needed to take a look down the road.
Problems could/would arise if either of you were unable to explain the source of the proceeds of a material asset sale and/or demonstrate the correct the application of the 'base cost' as per the share matching rules...
If you have sold assets that were held in a jointly-held GIA and the proceeds were paid into a jointly held current account, you have presumably opened (or added to) your own individual ISA accounts (as ISA accounts are never jointly held).
If the proceeds have all ended up in one of your individual bank accounts, it could complicate the optics...
If you want to raise another £40k, you'll only need to wait until 06 April to repeat the exercise but a new CGT base cost exercise will be required (on whatever it is that you choose to sell at that point).
You might want to inquire as to whether or not the provider will accept instructions from you (presumably jointly) to sell your jointly-held assets and distribute the proceeds (50:50?) to your individual bank accounts (if you have them)?
In summary, if you are confident that your individual share of the gain is below the £12,300 (each) allowance and that the total transaction value is less than 4x (ie. less than £49,200 each), there will be no CGT reporting obligation, but always helpful to keep clear records just in case anyone needed to take a look down the road.
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