C1.202 Spouses and civil partners
In the following article references to husband and wife, spouses or married persons include references to civil partners with effect from 5 December 20051.
A husband and wife are taxed independently on their respective chargeable gains. Accordingly:
• each spouse is entitled to set the full annual exempt amount against their gains (see C1.106A) and the rate of capital gains tax is computed without reference to the other spouse's income (see C1.107)
• losses made by one spouse cannot be transferred to the other spouse
• each spouse is responsible for making returns of their own gains, and for paying the tax due on those gains (see C1.109 and C1.110)
For the liability of individuals to capital gains tax, see C1.201. However, there a couple of areas that need to considered in relation to married couples, which are the transfer of assets between the members of the couple and the apportionment of the gain where jointly held assets are subject to a disposal to a third party. These are discussed below.
Interspouse transfers for capital gains tax
Although spouses are 'connected persons' and therefore, under general principles, any transfers of assets between them should be deemed to take place at market value2, there is a specific rule that disapplies this treatment where the couple live together. See also 'Transfer of assets on separation and divorce' below.
Instead, there is no chargeable gain or allowable loss on a disposal between husband and wife living together (ie the transfer takes place