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I've got a little CGT problem

I keep thinking I've solved the problem, but then doubts creep in.

The problem:- I have 2 lots of shares, each of which has was acquired in

1991, and so have a great deal of indexation and taper relief, so I wish to wash the CG out. I cannot wash it all out for it excedes my CGT allowance, so they need to be sold, pronto, and bought back.

I have a wife. I got her to open a trading account and transferred Shares B to her. Now she can sell shares B - I assume that she retains the same indexation and taper relief as I had??? (until 4 April).

Now, I wish to end up with the same shares (between us) as I started with. So, when she sells Shares B, I wish to sell Shares A and I wish her to buy shares A and for myself to buy shares B. The problem is really with shares B. Had I sold shares B, I might not buy them back for 30 days. But I didn't sell them - I transferred them to my wife. So, when may I buy them back? Correspondingly, may my wife buy shares A, sold by me (her spouse) at the same time that I sell them? Of course, I wish her to transfer shares A back to me at some point :-)

Am I making a mountain out of a molehill here? It isn't exactly a molehill from where I stand because, if I get it wrong, there is a lot of CGT to pay!!! Or prison if I don't report it correctly.

While I rememeber it - does transfer to my wife count as a 'disposal' for which I have to account to HMRC.

I would greatly appreciate any advice that is going.

GPG ---

Reply to
GPG
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Somone else will tell you the truth, but my take on all this as a lying non-expert is this:

1) You don't have to account for any capital gain or pay tax on it until you make one. So, if you keep your shares in your own name you have made no gain, and you pay no tax. 2) I think, though I may well be wrong, that any shares you have transferred to your wife will count as a sale for CGT purposes at the market value when you transferred them. You will be liable for the CGT based on the gain you have made less any indexation and taper relief. She will be liable for any capital gain from the date of transfer to when she sells them or transfers them back to you. You cannot between you reduce the amount of CGT which you will be liable to pay by arbitrarily tranferring them back and forth if that was the aim. 3) The rate of CGT falls to a flat 18% from April this year though I think indexation and taper reliefs will disappear. It may be better not to sell or transfer anything until the new financial year. 4) Never believe anything you read in newsgroups.
Reply to
Norman Wells

Correct. But I think the OP *wants* to realise a gain, in order to make use of indexation and taper before they vanish.

Incorrect. Selling batch of shares in two tranches by first giving one away to a spouse is a well-established mechanism for making use of two lots of annual CGT exemptions.

The wife would be treated as having acquired the shares at the same time as the husband had done so.

What you say would be true if the transfer were to a non-spouse.

It's *because* indexation and taper is disappearing, that it may be better to realise at least as much gain *now* as will maximise the benefit from indexation and taper, which between them may bring the effective rate of tax down to below 18%.

On the other hand, the annual exemption is not disappearing, and it may be a good idea simply to disregard indexation, taper, and CGT rates, and just realise just enough gain each year to maximise use of the annual exemption of *each* spouse.

Reply to
Ronald Raygun

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