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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My wife has a share portfolio, part of which has done very

Customer Question

My wife has a share portfolio, part of which has done very well in recent times and carries significant Capital Gains. I have fared far less well and made substantial losses over the last 7 years, through bad Fine Wine investments where the Companies have collapsed with little or no assets.
I plan to transfer a tranche of my wife's shares into my name and then sell them, crystallising a gain but offsetting that gain against my losses for CGT purposes. Is this ok and is there any financial limit?
Tx
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

There is nothing to stop your wife transferring some of her shares to you so that you can realise some gains in order to utilise your historic losses. Transfers of assets between spouses who are living together are carried out on a no gain, no loss basis so you will take your wife's base cost of shares transferred to you as your own. There is no limit on the value of intra spouse transfers.

There is no time limit by which you have to use capital losses but you do have to register losses made after 5 April 1996 with HMRC within four years of the end of the tax year in which you made them. Many people fall foul of that rule. Take a look here for confirmation.

I hope this helps but let me know if you have any further questions.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15761
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Customer: replied 1 year ago.

Is it risky to register the capital losses and crystallise the capital gain in the same tax year, or should the loss be confirmed as acceptable to HMRC before realising the gain?

Expert:  TonyTax replied 1 year ago.
If you have shares in companies which have gone bust and the companies have not been dissolved (unlikely but possible), then you still own the shares and you can make a claim for the loss with no time limit so far as I am aware. Take a look here for more information. The companies may have had their shares agreed by HMRC of being of negligible value as a result of a claim by another shareholder. Take a look at the list here.

Where the company has been dissolved, the date of dissolution fixes the disposal date for CGT purposes.

If you don't normally complete a tax return, you can register the losses by letter. You will need to provide dates and figures. Provided you are within the time limits, there is no risk of the losses not being allowed. You only need to report total gains in excess of the CGT exemption or if the total proceeds exceed £44,000 (4 times the annual CGT exemption) regardless of whether you made gains or losses.

You can register for self-assessment if you don't already complete annual tax returns here.
Customer: replied 1 year ago.

I looked at the HMRC site as advised and downloaded their Helpsheet No 281. This says in para 3 under CGT Liability, "If you are not living together or the asset involved is trading stock, any asset transferred between you is treated as transferred at its market value at the time of transfer. So, in these circumstances, the person transferring the asset may make a chargeable gain or an allowable loss." We are living together, but what is meant by trading stock? Does this effect your earlier advice?

Customer: replied 1 year ago.

I looked at the HMRC site as advised and downloaded their Helpsheet No 281. This says in para 3 under CGT Liability, "If you are not living together or the asset involved is trading stock, any asset transferred between you is treated as transferred at its market value at the time of transfer. So, in these circumstances, the person transferring the asset may make a chargeable gain or an allowable loss." We are living together, but what is meant by trading stock? Does this affect your earlier advice?

Expert:  TonyTax replied 1 year ago.
Assuming the shares in question are in comapnuies such as Barclays, Marks and Spencer and the like and you or wife are not share dealers by trade, then you can ignore that paragraph.

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