avoid capital gains tax on gifts

How to Avoid Capital Gains Tax on Gifts?

You can’t get rid of capital gains tax (CGT) while selling or disposing of your assets. But still, there are some strategies through which you can save your capital gains tax. Whenever you gift an asset, you have to pay CGT as it’s considered disposal of an asset. However, it varies depending on whom you gift it. So, in today’s blog we’d crack: How you can avoid capital gains tax on gifts?


Gifts to Spouse/Civil Partner – Do I need to pay CGT?


No, you are not required to pay capital gains tax on gifts you sell or give to spouse/civil partner and charity unless:


  • You are divorced, separated, or dissolved your relationship with your civil partner and are not living with your spouse at all in a tax year
  • You provided them the gifts for resale (business purpose)


The rules for calculating your gains or losses are complicated, therefore you have to get professional help from our tax advisors and accountants. You have to provide the details of your divorce, dissolution, court order, and any contract showing the transfer of assets to your tax advisor/accountant.


What If, they sell the asset later?


If your spouse or civil partner dispose of or sell the asset later, they have to pay tax on the gain of an asset. The gain will be determined by subtracting the value of the sold asset to the value you own it first. Therefore, you have to maintain a record of the cost of the asset to work out gains.


Gifts to Charity – Do I need to pay CGT?


You are exempted from the capital gains tax on gifts you made to a charity. There are few instances where you may be liable to pay if you sell or gift the asset to the charity for both mentioned cases:


  • Charge an additional amount than the amount on which you get it
  • With less cost than market value


To calculate gains for the charity, you need to consider the amount that the charity paid you, instead of calculating the value of an asset.


Key Takeaway: Normal rules (mostly CGT is charged) provided by HMRC, is applied on the gifts given to others rather than spouse/civil partner or charity.


Worried about CGT on disposal of an asset, our accountants will eliminate your worries. Just let us know!


Get Tax relief through CGT Allowance:


You only need to pay Capital Gains Tax, if your gain amount of an asset exceeds the threshold of CGT allowance. It is also called “Annual Exempt Amount.” The current threshold of CGT allowance is:

  • £12,300
  • £6,150  (For Trusts)


Quick Wrap Up:


The strategy we have presented in this blog to avoid capital gains tax on gifts is totally legal and you can apply it to get tax reliefs on CGT. Moreover, you can also benefit from CGT allowance to get tax exemption. However, it may be complex if you have encountered CGT for the first time or you lack basic knowledge about it, that’s why we recommend you to get professional services of our chartered accountants in London.


Feel free to share details here!


Disclaimer: This blog post contains general information about the topic and is not expert financial advice.

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