Planning between spouses and civil partners

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

Passing assets between spouses or civil partners is generally tax-advantaged for inheritance tax and for capital gains tax purposes. However, there are some potential pitfalls to be aware of.

Capital gains tax

When an asset is transferred between spouses / civil partners there is a disposal by the donor for CGT purposes. Despite being treated as separate individuals for tax purposes, married couples and civil partners are able to benefit from a rule that allows them to transfer assets between them at a value that gives rise to neither a gain nor a loss.

Where a disposal takes place on a ‘no gain / no loss’ basis, it means that neither a gain nor a loss arises to the donor as a result of the disposal. The donor is deemed to have received proceeds from the donee spouse / civil partner equal to the cost of the asset (plus indexation allowance where relevant, see below).

See Example 1.

Utilising the no gain / no loss rule is an important tax saving tool to ensure not

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