If one half of a married couple transfers some shares to the other half, does that somehow "reset" (for capital gains purposes) the "book cost" of those shares, or not?

This might be best illustrated by a hypothetical example case:

Mrs X made a £20,000 investment in 10,000 racy AIM shares at £2/share (outside of any ISA or SIPP wrapper) and a few years later they're now worth £8/share and she wants to take some gains to rebalance her portfolio, but without incurring any CGT. Assuming the CGT allowance is £11,300...

Obviously she can sell 1883 of the shares herself for a gain of 1883*(8-2)=£11,298 (for simplicity, I'm ignoring complications like being allowed to account for dealing costs and stamp duty etc).

But what if she and Mr X also want to make use of his otherwise unused CGT allowance? If she has her broker transfer another 1883 of the shares to Mr X's account and he disposes of them, is his CGT calculation also 1883*(8-2)=£11,298... or does the transfer somehow change the book cost so far as Mr X's calculation is concerned (because he got them "for free" maybe, in which case he can only safely dispose of 1412 shares 1412*(8-0)=£11,296)?

1 Answer 1


For exempt transfers between spouses, the book cost is based on when it was originally acquired by either of the two spouses, except where the asset was acquired before April 1982:

https://www.gov.uk/capital-gains-tax/gifts :

If they later sell the asset Your spouse or civil partner may have to pay tax on any gain if they later dispose of the asset.

Their gain or loss will be calculated from when you or they first owned it.

If this was before April 1982, your spouse or civil partner should work out their gain using the market value on 31 March 1982 instead.

So to answer the question in the subject: No, the transfer does not reset the book value. In your example, both Mr and Mrs X can sell the same number of shares and stay within the exemption.

  • Thanks for the referenced answer! (Having made a closer examination of the paperwork I'm actually looking at, it turns out that what was confusing me was that the gain was well over x10, and to my first glance and leading-digit-only mental arithmetic the relatively insignificant original cost looked like it had been completely ignored; crunching the numbers properly I can see that in fact all is in order).
    – timday
    Jun 25, 2017 at 17:49

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