Asset transfers between spouses
Produced in partnership with Emma Haley of Boodle Hatfield LLP
Asset transfers between spouses

The following Private Client practice note Produced in partnership with Emma Haley of Boodle Hatfield LLP provides comprehensive and up to date legal information covering:

  • Asset transfers between spouses
  • Inheritance tax
  • The spouse exemption
  • Anti-avoidance
  • Transferable nil rate band
  • Residence nil rate band
  • Capital gains tax
  • Income tax

It is natural that spouses may want to make gifts to each other since it is fairly typical for couples to share their property. The term ‘spouses’ is used in this Practice Note to refer to both married couples (of either the same or the opposite sex) and parties to a registered civil partnership.

It may be sensible to even up the couple’s assets so that they each have their own financial security and this also provides the greatest scope for tax planning. For example, if one spouse pays income tax at a higher rate than the other, it makes sense for them to allocate more of their income-producing assets to the spouse who pays income tax at lower rates.

The same principle applies for capital gains tax (CGT) where it makes sense to ensure that each spouse uses their annual exemption if they make chargeable disposals and that they pay tax at the lowest possible rates.

Given that spouses can pass assets between each other without any inheritance tax (IHT), CGT or income tax charge, there is maximum scope for organising their financial affairs in the most tax-efficient manner. This Practice Note considers the spouse exemption available in relation to each of the main taxes in turn.

Inheritance tax

The spouse exemption

The spouse exemption ensures that there is usually no IHT to pay on gifts from one spouse

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