Capital Gains Tax question - Gift between spouses, what CGT/other tax liability?

[AliBingo]

I have been reading that transfer of assets between spouses is exempt from CGT but am confused as surely it's an easy way to evade/avoid CGT? So I think I am misunderstanding something.

So for example if I bought some shares for £1 five years ago and they are now worth £101,000, I have made a gain of £100,000 and will get a hefty CGT bill if I sell.

But if I gift them to my spouse and he sells straightaway, he won't pay any CGT if the share price remains the same between him receiving them and selling them. So the government makes no CGT money from the gain in the shares' value.

So what is the catch? I suppose the £101k share sale proceeds would be subject to income tax or some other tax at my husband's rate?

(These are just example figures, sadly I am not actually in this position, just trying to understand how it all works!)

Thanks very much for any light that anyone can shed. I have googled lots and just become more and more confused!

Doesn’t quite work like that. There’s no CGT for you on the transfer, but your spouse would have to pay CGT based on the price you bought the shares at, not the value transferred to them.

What Tapenade said.

However, you can both use your tax free allowances. So if you gifted him half the shares and then you both sold, the first £12k-odd (until April 2023) would be tax free for each of you.

Ahhhh thanks so much both of you! I thought it sounded too good to be true but then also couldn't work out what the advantage would be, if the tax still applied. But that makes perfect sense, the transfer enables the spouse to utilise their CGT allowance on the sale as well.

Sadly in reality the numbers are not that high but it's possible that we could exceed the threshold one day!

Thanks for the replies, really useful.

Be aware that the tax free part of CGT is being cut. £12.3k until the end of the current tax year, then £6K, then £3k.

So think about whether to realise any gain before the end of the current tax year.

Gosh thanks @SheilaFentimanI did not realise that at all, great info thanks.