CGT husband->wife->other

A transfer could be the result of a gift or a sale. The legislation does not need to qualify it further, if no beneficial interest was transferred, then there was no "transfer".

The IR disagree (although that does not make them correct), and their CGT Manual alerts Tax Inspectors to this point.

Normal advice (and it would be mine) would be to keep the interval between the spousal transfer and disposal as long as possible, and any proceeds to be retained in the donee spouse's bank account.

Many thanks To Doug and Ronald. You have a good rapport! ..and thanks to all other contributors.

Tony

"Doug Ramage" wrote

OK then - what if the spouses have only a *joint* bank a/c?

I advise the donee spouse to open his/her own account.

Why? Keeping the proceeds in a joint account is surely a good indicator that the sale was intended to be of a jointly owned asset jointly liquidated, and therefore that the use of two CGT exemptions was entirely right and proper.

What part of the actual statute involved (TCGA?) is so ambiguous, do you think, that IR could seek to interpret it in a way which seems so obviously at odds with what any right-thinking person would assume the intention of the legislators to have been?

I don't agree. I consider it safer to keep each share of the sale proceeds separate.

None. It is the individual(s) who may be attempting to subvert the purpose of the legislation.

In what way? The legislation as good as says that it's OK to transfer assets freely between spouses (and therefore shares in them, bringing a sole asset into joint ownership or vice versa) without realising gains or losses, and also that it's OK to use both spouses' annual CGT exemptions when disposing of a joint asset, does it not? To all intents and purposes, to do this sort of thing is not exploiting an unintentional loophole, it is doing exactly what the legislation is for. This isn't subversion.

That is not in dispute for singly owned assets becoming joint assets. What the legislation is not meant to do is facilitate is the utilisation of 2 x tax reliefs and tax band(s) where the reality is that one spouse only is disposing of his/her asset.

What has established that this is not what the legislation is meant to do?

Although IR might frown upon it, is it OK by law for one spouse by way of gift to make the co-spouse part-owner of an asset virtually immediately prior to its sale to a third party, if the intention is for the sale proceeds to become joint property?

If so, what is wrong with the co-spouse subsequently gifting back their share to the original spouse?

Even if there are separate bank accounts, what's to stop the wife writing the husband a cheque, or buying him a Ferrari?

I am not sure if there is a court case on this point. As already posted, the IR consider that it's ineffective for CGT purposes. IMHO, they may well be correct. Since the Ramsay decision, courts had tended not to look that favourably on avoidance schemes.

Yes.

Nothing, in theory. But this comes back to my original point of the raising the possiblity of a pre-ordained scheme.

Nothing - but it does not assist in persuading the IR (or the Court) that this is a genuine joint transaction.