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No gain mean no pain

Married couples and civil partners can reduce Capital Gains Tax (CGT) by making use of a special rule which allows them to transfer assets between them at a value that means there is no gain or loss for tax purposes.

This rule can be used with assets help in one person’s name or for assets held in joint names.

An example would be Simon and Jane who are married. Simon bought a painting for £1,000 which is now worth £10,000 that he wants to sell. But, he is a higher rate tax payer and has already used is CGT allowance so would pay 28% tax on £9,000.

But, if he transfers the painting to Jane (who is a lower rate tax payer), she can sell it and not pay any tax because the gain is below her CGT allowance. She will be treated as buying the painting on the same date and at the same price that Simon did.

If in the following year, Simon wanted to sell a house he owned with a gain of £33,000, he could transfer 33% and use Jane’s CGT allowance. Or, he could transfer 66% and use both their allowance and her lower rates of tax.

Make sure you use the no gain rule if want to sell assets which have a CGT liability.