CGT Annual exemption question

I am selling an asset which is held in joint names between myself and my wife. My wife is a non-tax payer. Is she entitled to the CGT annual exemption and is her personal allowance (for Income Tax purposes) take into consideration? I realise that as a Tax Payer I qualify for both. Many Thanks.

Reply to
Baglady
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Yes she is and no it isn't.

Everyone qualifies for both, but the CGT annual exempt amount can only be used against capital gains, not against other income, and the personal allowance can only be used against other income, and not against capital gains.

So, the CGT AE being £8800 this year, between the two of you you can have a joint gain of £17600 before any CGT becomes payable. If the gain is much above that, you may need to consider shifting the notional ownership shares around a bit to minimise the tax bill.

Of her share of the gain, the first £8800 is exempt, the next £2150 are taxed at 10%, and the next £31150 at 20%, and the rest at 40%.

Of your share of the gain, the first £8800 is exempt, the next £X at 20% (if £X is positive) and the rest at 40%. This assumes your "normal" income exceeds the personal allowance by £Y, that £Y is at least £2150, and that £X is £33300-£Y.

So you want to arrange ownership proportions in such a way that the first £17600 of joint gain are shared 50-50, the next £Z of gain are hers alone (where £Z is the smaller of £33300 and £Y), and the rest can be 50-50 again.

Reply to
Ronald Raygun

And see if you can sell part of the asset next tax year and use that allowance.

Reply to
Miss L. Toe

Thank you for your advice. It's really helpful.

Reply to
Baglady

Many thanks.

Reply to
Baglady

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