Use Your Spouse's CGT Allowance
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.
Why This Matters
Every UK individual receives an annual Capital Gains Tax exemption. For the current exempt amount and rates, use the rates and allowances 2026/27 page. The planning principle does not change: each spouse or civil partner gets their own exemption, and that is what makes the transfer strategy so useful.
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.
A Worked Example
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.
How to Execute the Strategy: Step by Step
- Identify assets with unrealised gains. These are investments currently held outside an ISA where the current value exceeds what you originally paid. Calculate the approximate gain on each holding before proceeding.
- Transfer a portion to your spouse. Contact your investment platform to initiate the transfer. This is a standard re-registration of ownership — not a sale. No CGT arises at this point. Your spouse inherits your original cost base (the price you originally paid), not the current market value.
- Each of you sells your respective portion. Both of you then sell your holdings in the open market. Each sale realises a gain calculated from the original purchase price. Each of you applies your own £3,000 annual CGT allowance against your respective gain.
- Both reinvest inside ISAs. Using the sale proceeds, each of you subscribes to your Stocks & Shares ISA and repurchases the same (or equivalent) assets. All future growth on those assets is now permanently tax-free.
- Repeat annually. With up to £6,000 of combined gains available tax-free each year, you can systematically move your entire portfolio inside the ISA wrapper over time — paying no CGT along the way.
The Bed & ISA Opportunity
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.
Frequently Asked Questions
Does the receiving spouse have to sell immediately?
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.
Does this affect the annual ISA subscription limit?
No. ISA subscriptions come from cash proceeds — the sale of the transferred assets. Each spouse uses their own annual ISA allowance, and the spousal CGT transfer does not consume or affect either person's wrapper capacity. Use the rates and allowances 2026/27 page for the current ISA limit.
What about stamp duty or platform charges?
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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