Transfer of shares to spouse - any advice or experience?
Discussion
I'm getting towards the good end of my FI journey, but it seems I've overpaid a bit to pension, leaving me with a cash bridge to make up over the next few years. Essentially I have a liquidity problem.
Market-turbulence notwithstanding, one option is to start selling shares I've accrued via work. Being UK based, I'm liable for CGT and I've read the guidance on how I'm treated, and how my wife would be treated at the point of share sale.
My plan was to transfer half of the shares into her newly created account and then take advantage of the doubled CGT allowance to slowly extract the shares to cash and build the bridge between today and pension day (2037).
The proceeds would then go into ISAs to help get us to the annual limit.
All advice and experience welcomed, especially any online calculators that can help me understand which shares to sell, as they have different gains depending on the point of award.
Market-turbulence notwithstanding, one option is to start selling shares I've accrued via work. Being UK based, I'm liable for CGT and I've read the guidance on how I'm treated, and how my wife would be treated at the point of share sale.
My plan was to transfer half of the shares into her newly created account and then take advantage of the doubled CGT allowance to slowly extract the shares to cash and build the bridge between today and pension day (2037).
The proceeds would then go into ISAs to help get us to the annual limit.
All advice and experience welcomed, especially any online calculators that can help me understand which shares to sell, as they have different gains depending on the point of award.
IMO you essentially have two possible ways forward,
1. Are you good with spreadsheets? You need to get everything laid out on a spreadsheet so you can see what's what.
These days, the order in which shares of the same class in the same company have been acquired generally makes no difference. They all sit in one "pool" with an averaged cost/value of acquisition. When you sell any share its "base cost" is that averaged figure and your gain is the difference between that base cost and your actual selling price. Similarly, if you transfer shares to a spouse they carry across at your base cost. If you go this route, make sure you don't fall into the potential trap of gifting 1,000 shares which she immediately sells - because it looks obvious it was really you making the sale and just trying to dodge some tax. Gift, say, 1,500 shares and wait a few months before she sells the 1,000 as her own decision.
2. Get an IFA or accountant on it.
Whichever route you go you need to be sufficiently confident you've got it right to be able to fend off any enquiries from HMRC. When you submit your CGT return (relevant pages of Self Assessment) you require fully detailed and robust calculations at hand. HMRC do sometimes ask questions about CGT.
1. Are you good with spreadsheets? You need to get everything laid out on a spreadsheet so you can see what's what.
These days, the order in which shares of the same class in the same company have been acquired generally makes no difference. They all sit in one "pool" with an averaged cost/value of acquisition. When you sell any share its "base cost" is that averaged figure and your gain is the difference between that base cost and your actual selling price. Similarly, if you transfer shares to a spouse they carry across at your base cost. If you go this route, make sure you don't fall into the potential trap of gifting 1,000 shares which she immediately sells - because it looks obvious it was really you making the sale and just trying to dodge some tax. Gift, say, 1,500 shares and wait a few months before she sells the 1,000 as her own decision.
2. Get an IFA or accountant on it.
Whichever route you go you need to be sufficiently confident you've got it right to be able to fend off any enquiries from HMRC. When you submit your CGT return (relevant pages of Self Assessment) you require fully detailed and robust calculations at hand. HMRC do sometimes ask questions about CGT.
I used to do this a lot but I would suggest that Panamaxs’ advice might be more up to date.
My shares were either received as options for which I paid income tax (and then CGT if applicable when due ) or bonus payments given as shares for which the same was true.
Spousal transfers could be done on a virtually unlimited in and out basis to also take into account dividend tax rates and the like.
The CGT allowances were also far more generous with over £12k each being the case for each person.
When I sold my entire holdings in the company ( my wife then owned far more than me ) no taper reliefs or indexation were then in play so she had a painful bill.
Panamax’s advice on getting an Accountant especially if you have considerable amounts at stake is well worth heeding as is also the possibility of investing in certain tax relief schemes to offset some of the CGT but only if considerable and such schemes need to make sense as an investment in their own right firstly imho.
My shares were either received as options for which I paid income tax (and then CGT if applicable when due ) or bonus payments given as shares for which the same was true.
Spousal transfers could be done on a virtually unlimited in and out basis to also take into account dividend tax rates and the like.
The CGT allowances were also far more generous with over £12k each being the case for each person.
When I sold my entire holdings in the company ( my wife then owned far more than me ) no taper reliefs or indexation were then in play so she had a painful bill.
Panamax’s advice on getting an Accountant especially if you have considerable amounts at stake is well worth heeding as is also the possibility of investing in certain tax relief schemes to offset some of the CGT but only if considerable and such schemes need to make sense as an investment in their own right firstly imho.
Much appreciated. The intention isn't to sell any immediately because the markets are way down, but it makes sense to get the gifts done and then we can choose our moment each in this tax year to make the sales and top up the ISAs. The intent is to keep each of our annual sell-offs under the CGT threshold and gradually increase cash holdings over the next few years without being hammered on tax.
I've a mate who's an accountant, so I'll make sure to buy him some strong coffee and bring my laptop! We can word a firm statement of gift I'm sure, as I sign away my rights.
I've a mate who's an accountant, so I'll make sure to buy him some strong coffee and bring my laptop! We can word a firm statement of gift I'm sure, as I sign away my rights.
Smitters said:
Much appreciated. The intention isn't to sell any immediately because the markets are way down, but it makes sense to get the gifts done and then we can choose our moment each in this tax year to make the sales and top up the ISAs. The intent is to keep each of our annual sell-offs under the CGT threshold and gradually increase cash holdings over the next few years without being hammered on tax.
I've a mate who's an accountant, so I'll make sure to buy him some strong coffee and bring my laptop! We can word a firm statement of gift I'm sure, as I sign away my rights.
The actual transfer of shares from you to your wife is the easiest part and basically involves a stock transfer form which usually the company secretariat dept has both a stock of and can also give you further advice especially if you are a Director / approved person etc. I've a mate who's an accountant, so I'll make sure to buy him some strong coffee and bring my laptop! We can word a firm statement of gift I'm sure, as I sign away my rights.
There may also be certain times of year when you aren’t allowed to do this especially if you are senior or may have knowledge of share price sensitive data.
Personally I think transferring more than you intend to sell and then waiting months to do it is a bit overcautious. I've transferred stuff which my wife's then sold (in the exact amounts transferred) plenty of times over the years and never been remotely pulled up on it nor has anyone I've spoken to who's done the same, it's pretty common and vanilla tax planning.
NowWatchThisDrive said:
Personally I think transferring more than you intend to sell and then waiting months to do it is a bit overcautious. I've transferred stuff which my wife's then sold (in the exact amounts transferred) plenty of times over the years and never been remotely pulled up on it nor has anyone I've spoken to who's done the same, it's pretty common and vanilla tax planning.
The waiting is more a function of share price and also exchange rate, as they're in dollars. Ads an extra layer of complexity to the moving parts and means I need to be a bit below the CGT threshold in case the currency conversion takes it over.As for the transfer, I'd just rather do it in one. There are trading blackouts I'm subject to, so doing it once, versus multiple times eases the admin burden.
Smitters said:
NowWatchThisDrive said:
Personally I think transferring more than you intend to sell and then waiting months to do it is a bit overcautious. I've transferred stuff which my wife's then sold (in the exact amounts transferred) plenty of times over the years and never been remotely pulled up on it nor has anyone I've spoken to who's done the same, it's pretty common and vanilla tax planning.
The waiting is more a function of share price and also exchange rate, as they're in dollars. Ads an extra layer of complexity to the moving parts and means I need to be a bit below the CGT threshold in case the currency conversion takes it over.As for the transfer, I'd just rather do it in one. There are trading blackouts I'm subject to, so doing it once, versus multiple times eases the admin burden.
To keep clear from any questions of tax avoidance you need to be able to demonstrate the gift was absolute and unconditional.
There's no point making that a difficult test to pass when it can be made an easy test to pass.
Obviously it helps significantly if the proceeds of sale are, say, invested by the spouse in their own sole name.
There's no point making that a difficult test to pass when it can be made an easy test to pass.
Obviously it helps significantly if the proceeds of sale are, say, invested by the spouse in their own sole name.
Panamax said:
To keep clear from any questions of tax avoidance you need to be able to demonstrate the gift was absolute and unconditional.
There's no point making that a difficult test to pass when it can be made an easy test to pass.
Obviously it helps significantly if the proceeds of sale are, say, invested by the spouse in their own sole name.
Good info - and yes - they would go from my control to her sole control in a share account and ultimately into her ISA. That would be easily demonstrated.There's no point making that a difficult test to pass when it can be made an easy test to pass.
Obviously it helps significantly if the proceeds of sale are, say, invested by the spouse in their own sole name.
If the shares are in a USA company and traded on the NYSE, the USA share administration company may require you to obtain a "Medallion Guarantee". It is not easy to find a UK based organisation familiar with the MG and able to provide this to you. And the fee is quite high. Three years ago when I came across this it was around £500.
R.
R.
The Leaper said:
If the shares are in a USA company and traded on the NYSE, the USA share administration company may require you to obtain a "Medallion Guarantee". It is not easy to find a UK based organisation familiar with the MG and able to provide this to you. And the fee is quite high. Three years ago when I came across this it was around £500.
R.
Thanks. I'll look into this.R.
The Leaper said:
If the shares are in a USA company and traded on the NYSE, the USA share administration company may require you to obtain a "Medallion Guarantee". It is not easy to find a UK based organisation familiar with the MG and able to provide this to you. And the fee is quite high. Three years ago when I came across this it was around £500.
R.
Thanks. I'll look into this.R.
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