Do You Pay Capital Gains Tax on Shares You Give Your Spouse?

What happens when you give shares to your spouse

If you're married or in a civil partnership and you live together, you can give your spouse shares without paying any Capital Gains Tax. The law treats the transfer as if you'd sold the shares for exactly what you paid, so there's no gain and no tax.

The same applies if your spouse pays you for the shares. HMRC ignores whatever money changes hands. There's no stamp duty on a gift of shares either.

The downside is that the shares now belong to your spouse, and so does the money when they sell. And if the shares are worth less than you paid, you can't claim that loss by giving them to your spouse.

What your spouse pays when they sell

Your spouse takes over what you paid. When they sell, their gain is the sale price minus your original cost, including the fees you paid when you bought.

If your spouse already owns the same shares, the ones you give them join their Section 104 pool at your cost. That pool is the single average cost HMRC uses for each holding.

What changes is whose allowance and tax rate apply. Each of you pays tax only on your own gains, and each of you has a £3,000* tax-free allowance. Your spouse's gain uses their allowance. Anything above it is taxed at 18%* while it fits in whatever is left of the £37,700* basic rate band after their income, and 24%* after that. If your spouse is a higher rate taxpayer, it's 24%* on all of it. How much difference this makes depends on how much of your spouse's allowance is left this tax year, and how much of their basic rate band their income uses.

* Correct at the time of writing. Rates and allowances can change, so check HMRC's current Capital Gains Tax rates and tax-free allowance on GOV.UK.

If the sale needs reporting, it goes on your spouse's own tax return, not yours. Either way, they'll need a record of what you paid.

An example

Say you bought 1,000 shares in Company A for £10,000, including fees. They're now worth £16,000. You and your spouse are both higher rate taxpayers, and neither of you has sold anything else this tax year.

* Correct at the time of writing. Rates and allowances can change, so check HMRC's current Capital Gains Tax rates and tax-free allowance on GOV.UK.

When the rule doesn't apply

The rule covers spouses and civil partners who live together, with extra time after a separation. You count as living together unless you've separated under a court order or a formal deed of separation, or in a way that's likely to be permanent.

That extra time runs to the end of the third tax year after you stopped living together, or the date a court grants the divorce, if that's earlier. Transfers under a formal divorce or separation agreement, or a court order, have no time limit. GOV.UK's summary page still describes the older, shorter rule, so go by the legislation and HMRC's helpsheet HS281. If you're separating, get advice from a tax adviser before moving shares. The same goes if either of you lives abroad, or if the gains involved are large.

This guide is about gifts while you're both alive. Shares you inherit when a spouse dies follow a different rule, and our guide to inheriting shares from a spouse explains it.

Unmarried partners aren't covered. A gift of shares to them is treated as if you'd sold them at market value, so you pay tax on any gain. Our guide to giving shares to your children or to charity explains how that works for family, and why a gift to charity is different.