One of the most underused rules in UK tax. Married couples and civil partners can double their household's annual tax-free gains — and progressively shelter investments from CGT forever.
Under Taxation of Chargeable Gains Act 1992 (TCGA92), Section 58, disposals of assets between spouses or civil partners who are living together are treated as giving rise to neither a gain nor a loss. The asset is deemed to transfer at a value equal to the original acquisition cost — meaning no CGT liability arises on the transfer itself.
The receiving spouse inherits the transferring spouse's original cost base. Any future gain is calculated from that original purchase price — and each spouse uses their own separate annual CGT exemption against their share of the gain.
Every UK individual receives an annual Capital Gains Tax exemption — £3,000 for 2024/25 and 2025/26. Gains realised within this threshold are tax-free. Above it, you pay CGT at 18% (basic rate taxpayer) or 24% (higher or additional rate taxpayer) on investments such as shares and funds. Property gains use different rates.
If you hold all your investments solely in your own name, you can only access one £3,000 exemption per year. By transferring a portion of your holdings to your spouse or civil partner before selling, you can effectively access two exemptions — doubling the annual tax-free threshold to £6,000 for the household.
This is especially powerful when combined with a Bed & ISA strategy: selling assets, realising the gain (tax-free within combined allowances), and repurchasing inside an ISA. Once inside an ISA, all future growth and income from those assets is permanently sheltered — no CGT, no Dividend Tax, no Income Tax, ever.
You hold shares in a global equity ETF worth £30,000, purchased for £18,000. Your total gain is £12,000. You want to move everything into your Stocks & Shares ISA — a strategy known as Bed & ISA — but without triggering a large CGT bill. Without involving your spouse, you can only realise £3,000 of gains tax-free per year, meaning it would take four years to shelter the full holding.
In this example, both spouses then reinvest into their respective Stocks & Shares ISAs. The entire £30,000 holding — which will compound and generate dividends from this point forward — is now permanently inside a tax-free wrapper. Not a penny of future growth will ever be subject to tax.
The Bed & ISA strategy (selling assets outside an ISA and repurchasing them inside) is one of the most effective long-term tax planning moves available to UK investors. The CGT spousal transfer supercharges it: instead of being limited to sheltering £3,000 of gains per year, a married couple can shelter £6,000. On a larger portfolio, this can save tens of thousands of pounds in future taxes over a decade of systematic transfers.
It is worth noting that there is a brief period between selling and repurchasing where you are out of the market — typically a few days. This is an unavoidable feature of the strategy and should be considered when markets are volatile.
The transfer must be outright and unconditional. You cannot have any side agreement to get the proceeds back, to share them, or to direct how your spouse uses the money. HMRC will treat any conditional transfer as if it never happened and charge CGT accordingly — this is known as the "settlements legislation" anti-avoidance rule. The asset must genuinely become your spouse's, with no strings attached. Additionally, this rule only applies to spouses and civil partners who are living together — couples who are separated (even if still legally married) lose this benefit.
The same no-gain/no-loss rule also applies to transfers of assets outside the ISA context. If one spouse has a higher rate of CGT than the other (for example, one is a basic rate taxpayer with gains taxed at 18%, the other a higher rate taxpayer at 24%), transferring assets to the lower-rate spouse before selling can reduce the overall tax bill — even without the ISA step.
No. Once the asset is transferred, the receiving spouse can hold it indefinitely. The no-gain/no-loss rule applies to the transfer itself — what happens after that is a separate question governed by ordinary CGT rules at the time of any future disposal. The cost base (original purchase price) travels with the asset.
No. ISA subscriptions come from cash proceeds — the sale of the transferred assets. Each spouse uses their own annual ISA allowance (£20,000 each for 2025/26). The spousal CGT transfer does not consume or affect either person's ISA allowance.
Stamp Duty Reserve Tax (SDRT) at 0.5% typically applies when buying shares. This would apply when each spouse repurchases assets inside their ISA. Most platforms also charge dealing fees. These costs should be factored into your calculations, though they are generally modest relative to the CGT savings achieved.
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