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Gifts to a charity or your spouse

Source: HM Revenue & Customs | | 21/06/2017

There is usually no Capital Gains Tax (CGT) to be paid on the gift of assets between married couples and civil partners. However, there is still a disposal that has taken place for CGT purposes, effectively, at no gain or loss on the date of the transfer. When the asset ultimately comes to be sold, the gain or loss will be calculated using the base cost when the asset was first owned by the spouse or civil partner making the gift.

There are a few exceptions that couples should be aware of where the relief does not apply. These mainly relate to the use of goods which are sold on by the transferee’s business and for couples that were separated and not living together for the entire tax year when the assets were transferred. Spouses or civil partners that lived together at any point in the tax year when the assets were transferred can still benefit from these rules.

If a transfer did not qualify, then the asset must be retrospectively valued at the date of the transfer and the transferor is liable for any gain or loss.

There are similar rules for assets that are gifted to charities. However, CGT may be due where an asset is sold to a charity for more than you paid for it and less than the market value. The gain in this case would be calculated based on what the charity paid you rather than the market value of the asset.

Planning note:

If you are considering any significant gifts to your spouse, or to a charity, we would recommend that you call to discuss the CGT aspects, and also the effects on your estate planning: will the transfer complicate existing Inheritance Tax planning. If the gift is a property, an outright transfer to your spouse, for no consideration, will normally be free of a stamp duty charge, but a charge may apply if the property has an existing mortgage.



 

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