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When are you Not Required to Pay Capital Gains Tax on Assets? | Capital Gains Tax Allowances

When are you Not Required to Pay Capital Gains Tax on Assets? | Capital Gains Tax Allowances

Mike Wakeford

CGT on the Transfer of Assets
In most cases, no Capital Gains Tax (CGT) is to be paid on the transfer of assets to a spouse or civil partner. There is, however, 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 from when the original spouse or civil partner first owned the asset.
There are a few exceptions that couples should be aware of when the relief does not apply. This mainly relates to the use of goods sold by the transferee’s business and for separated or divorced couples. The CGT rules that apply during separation and divorce changed for disposals that occurred on or after 6 April 2023.

CGT on Assets in the Case of Divorce or Separation
Changes made this year extended the period for separating spouses and civil partners to make no gain/no loss transfers up to three years after the year they cease to live together. The new rules also provide unlimited time if the assets are the subject of a formal divorce agreement. Previously, the no gain/no loss treatment was only available concerning any disposals in the remainder of the tax year in which the separation occurred. Where a transferred asset does not ultimately qualify for relief, the asset must be retrospectively valued at the date of the transfer, and the transferor is liable for any gain or loss.

CGT on Gifted Assets
There are similar rules for assets that are gifted to charities. However, CGT may be due when an asset is sold to a charity for more than was paid for and less than the market value. The gain, in this case, would be calculated based on what the charity paid rather than the market value of the asset.
Contact our Specialist Tax Team
If you are unsure if the transfer of your assets will trigger capital gains tax and how to report this correctly, please contact our Tax team today.