Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a299813

New flat rate CGT to end bed and spouse ploy

Spouses will no longer be able to make use of a capital gains tax benefit under the new 18% charge.

 
New flat rate CGT to end bed and spouse ploy

The trick of transferring shares to a spouse who pays lower or no tax to reduce capital gains tax (CGT) when the stock is sold will no longer be viable under the new 18% flat rate of CGT.

Previously those using these so-called bed and spousing techniques could keep CGT low by transferring shares to a spouse with a beneficial tax rate at the end of the tax year, meaning no CGT liability.

Extra benefit would then be gained when the spouse sold the shares as the couple could calculate the taper relief over their combined holding period of both spouses, getting increased taper relief.

Richard Leeson, head of UK development for Prudential International, said that bed and spousing will no longer be available with the 18% tax rate.

‘Bed and spousing is dead under the new CGT regime as they will have to pay a flat rate of 18% no matter how long they have held the shares,’ he said. ‘I think that people will have no choice but to just sit on shares now and this restricts their investment freedom.’

The government clamped down on a similar ‘bed and breakfasting’ scheme in 2006 that stopped people selling all or part of their shares to crystallise a profit under the CGT on the last day of the tax year and then re-buying them the next day in the new tax year. New rules mean you now have to wait one month before buying shares in a company in which you sold shares. 

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

Black Monday: 30 years on from the 1987 crash

by Michelle McGagh on Oct 19, 2017 at 12:48

Sorry, this link is not
quite ready yet