Taxation (UK) · The use of exemptions and reliefs in deferring and minimising tax liabilities arising on the disposal of capital assets

Tax Planning for Capital Gains: Spouse Transfers, Timing and Payment

Updated 11 October 2026 · Fact-checked

CGT planning reduces tax legally. Transfer assets between spouses or civil partners at no gain, no loss, so both use an annual exempt amount and the lower 18% rate. Spread disposals across tax years to use more exempt amounts. Then state the reporting and payment date for each gain.

Understand Tax Planning for Disposals: Spouses, Timing and Payment

Capital gains tax planning is about three levers: who makes the disposal, when it is made, and when the tax is paid. You cannot change the gain itself. You can change how much of it is taxed and at what rate.

The first lever is the spouse transfer. A transfer between spouses or civil partners who are living together is treated as made at no gain and no loss. The receiving spouse takes over the original cost and the original acquisition date. So you can move an asset to the spouse who will pay less tax on the sale, with no tax on the transfer itself.

Why does that help? Each person has their own annual exempt amount of £3,000 and their own basic rate band. Gains are taxed at 18% to the extent they fall within the unused basic rate band (£37,700 less taxable income), and at 24% above it. A spouse with low income pays 18%. A higher rate taxpayer pays 24%. Capital losses cannot be transferred between spouses, so a loss stays with the person who made it.

The second lever is timing. The tax year ends on 5 April. A disposal on 5 April falls in one year and a disposal on 6 April falls in the next. Splitting disposals across two tax years uses two annual exempt amounts. It also delays the payment date by a year. The disposal date is normally the date of the contract, not completion.

The third lever is payment and reporting. Gains on most assets are reported on the self-assessment return and the tax is due on 31 January after the end of the tax year. For a disposal of UK residential property, a return and payment on account are due within 60 days of completion. A good answer names the right date for the right asset.

Key rules to remember

Spouse transfer: Transfer between spouses or civil partners living together = no gain, no loss; The receiving spouse takes the transferor's cost and acquisition date. The transfer must be a genuine one, with the receiving spouse owning the asset outright.
Annual exempt amount: Taxable gains = Net gains for the year − £3,000; Each person has their own amount. It is lost if unused. It cannot be transferred to a spouse.
CGT rates: 18% within the unused basic rate band; 24% above it; Unused band = £37,700 − taxable income. Add the taxable gain on top of taxable income to see how much falls in the band.
Business asset disposal relief: Qualifying gains taxed at 14% up to a £1,000,000 lifetime limit; Where it applies, it uses up the basic rate band first. Check the conditions in the question.
Normal due date: Gains in tax year 20X1/X2 are due by 31 January 20X3; This applies to assets other than UK residential property. Paying through self assessment is the default.
UK residential property: Return and payment due within 60 days of completion; The 60 days run from completion, not the contract date. The disposal date for the gain is still the contract date.

How to solve Tax Planning for Disposals: Spouses, Timing and Payment questions

Use this method for any planning question on gains. Work out the tax first, then compare options.

1List each person's position: taxable income, other gains, capital losses, and whether the annual exempt amount is still available.
2Compute the unused basic rate band for each person: £37,700 less taxable income (or nil if income is higher).
3Compute the gain on the asset, using disposal proceeds less cost and allowable costs. Check whether any relief such as business asset disposal relief applies.
4Test the planning options: transfer to a spouse, split across spouses, or delay to the next tax year. Recompute the tax for each option.
5Deduct the annual exempt amount for each person before applying 18% or 24%. Apply 18% to the part of the taxable gain within the unused band and 24% to the rest.
6Compare the totals and state the saving in £. Say which option you recommend.
7State the reporting and payment dates for the recommended option, using the 60-day rule for UK residential property and 31 January otherwise.

Quickest way: Two-column comparison of the options

When to use it: Use when the question asks you to recommend how to minimise tax or compare selling now with selling later.

Write one column per option (for example, sell by A, sell by B, or sell next year).
Under each, write the gain, deduct £3,000, and split the taxable gain into the part at 18% and the part at 24%.
Add up the tax in each column and circle the lowest.
Check that you have used each available annual exempt amount and each unused basic rate band.
Add one sentence on the due date.

Common mistakes in Tax Planning for Disposals: Spouses, Timing and Payment

Applying 24% to the whole gain of a higher rate taxpayer without checking the band.
Students remember the two rates but forget that the band is tested against taxable income plus the gain.
Fix: Always compute £37,700 less taxable income first. Tax the gain at 18% up to that amount and 24% above it.
Treating a spouse transfer as a taxable disposal at market value.
Students apply the general rule for gifts, which uses market value.
Fix: For spouses or civil partners living together, use no gain, no loss. The receiver takes the original cost and date.
Transferring a capital loss to a spouse, or assuming the annual exempt amount can be shared.
Students assume spouses are treated as one taxpayer.
Fix: Each spouse is taxed separately. Losses and exempt amounts stay with the individual, so plan to make the gain in the hands of the person who can use them.
Using completion date instead of contract date to decide the tax year.
Students think the disposal happens when the sale completes.
Fix: The disposal date is normally the date of the contract. Use it to choose the tax year and the 31 January date. For UK residential property, the 60-day period runs from completion.
Giving 31 January as the payment date for a UK residential property gain.
Students learn the self-assessment date first and apply it to every gain.
Fix: Check the asset type. For UK residential property, report and pay within 60 days of completion.
Forgetting to deduct the annual exempt amount before applying the rate.
Students rush to the band calculation.
Fix: Net gains less £3,000 gives the taxable gain. Do this for each person and each tax year.

Worked examples

Example 1

Mr Archer owns shares (not UK residential property) that he will sell in 2025/26 for a gain of £30,000. He has taxable income of £60,000 and no other gains. His wife has taxable income of £10,000, no gains and no losses. Compute the CGT if Mr Archer sells, and the saving if he transfers part of the shares to his wife first so that the tax is as low as possible.

Show the solution

Without planning: taxable gain = £30,000 − £3,000 = £27,000. Mr Archer's basic rate band is already used by income, so all is taxed at 24%: £27,000 × 24% = £6,480.
With planning: the transfer to Mrs Archer is no gain, no loss. She takes over his cost and date.
Plan so each spouse uses an annual exempt amount. Mr Archer keeps a gain of £3,000 (covered by his annual exempt amount, so no tax). Mrs Archer takes the rest of the gain: £27,000 (shares carrying 90% of the gain).
Mrs Archer: taxable gain = £27,000 − £3,000 = £24,000. Her unused basic rate band = £37,700 − £10,000 = £27,700. The gain of £24,000 is within the band, so tax is £24,000 × 18% = £4,320.
Total tax with planning = £0 + £4,320 = £4,320.
Saving = £6,480 − £4,320 = £2,160.

Answer: Tax if Mr Archer sells everything is £6,480. By transferring shares carrying £27,000 of the gain to his wife before sale, the total falls to £4,320, a saving of £2,160. Tax is due by 31 January 2027.

Example 2

Mrs Clarke is a higher rate taxpayer. In 2025/26 she has already made gains of £8,000 on other assets. She plans to sell a UK commercial property for a gain of £20,000. She can sell on 20 March 2026 or on 20 April 2026. Assume rates and the annual exempt amount are the same in 2026/27 and she has no other gains that year. Compare the CGT and say when the tax is due for each date.

Show the solution

Sale on 20 March 2026 falls in 2025/26. Total gains = £8,000 + £20,000 = £28,000.
Taxable gains = £28,000 − £3,000 = £25,000. Higher rate taxpayer, so 24%: £25,000 × 24% = £6,000. Due 31 January 2027.
Sale on 20 April 2026 falls in 2026/27.
2025/26: £8,000 − £3,000 = £5,000 taxable. £5,000 × 24% = £1,200. Due 31 January 2027.
2026/27: £20,000 − £3,000 = £17,000 taxable. £17,000 × 24% = £4,080. Due 31 January 2028.
Total for the April option = £1,200 + £4,080 = £5,280.
Saving = £6,000 − £5,280 = £720 (an extra £3,000 exempt at 24%).

Answer: Selling on 20 March 2026 costs £6,000, payable by 31 January 2027. Selling on 20 April 2026 costs £5,280 in total, with £4,080 of it not payable until 31 January 2028. Delay saves £720 and defers the larger payment by a year, so she should sell in April if the commercial risk of waiting is acceptable.

Exam tips

Read the question for the type of asset. UK residential property brings the 60-day rule. Other assets use 31 January after the tax year.
Show the unused basic rate band as a working. Markers award marks for £37,700 less taxable income.
When asked to minimise tax, make the recommendation explicit and give the £ saving. A calculation alone often loses the final mark.
Remember that spouse planning only works for spouses or civil partners living together, and that the transfer must be a real transfer of ownership.
Use the rates given in the exam: 18%, 24%, 14% for business asset disposal relief and an annual exempt amount of £3,000. Do not use rates from memory of earlier years.

Practice questions from The use of exemptions and reliefs in deferring and minimising tax liabilities arising on the disposal of capital assets

Tax Planning for Disposals: Spouses, Timing and Payment: frequently asked questions

How do spouse transfers reduce capital gains tax?

A transfer between spouses or civil partners living together is made at no gain and no loss. This lets you move the asset to the spouse who can use an annual exempt amount or a lower rate. The receiver takes over the original cost and acquisition date.

What is the CGT reporting deadline for UK residential property?

You report the disposal and pay the tax on account within 60 days of completion. Other gains are normally reported on the self-assessment return, with tax due on 31 January after the end of the tax year.

Can I use my spouse's annual exempt amount or capital losses?

No. Each person has their own annual exempt amount of £3,000, and it is lost if unused. Capital losses also stay with the person who made them. Planning means getting the gain into the hands of the person who can use the exempt amount or has a lower rate.

How does timing a disposal across tax years help?

A disposal on or before 5 April falls in one tax year and one on or after 6 April falls in the next. Splitting gains across two years uses two annual exempt amounts. It also delays the payment date for the later gain by a year.