Tax Free Gifts
In this article, we take a look at gifts and when you won’t need to pay Capital Gains Tax (CGT).
There are three circumstances when you may not have to pay capital gains tax (CGT) on a gift. They are:
- If the taxable value of the gift is below the CGT annual tax-free allowance of £12,300.
- Gifts to your spouse or civil partner, or
- Gifts to charities.
Gifts to your spouse or civil partner
You do not pay Capital Gains Tax on assets you give or sell to your husband, wife or civil partner, unless:
- You separated and did not live together at all in the tax year you made the gift.
- You gave them goods for their business to sell on.
The tax year is from 6 April to 5 April the following year.
If the spouse/partner receiving the gift later sells the asset, your spouse or civil partner may have to pay tax on any gain. The gain will be calculated on the difference in value between when you first owned the asset and the amount realised when they disposed of it.
You should keep a record of what you paid for the asset.
Gift to charities
You do not have to pay CGT on assets you give away to charity.
You may have to pay CGT if you sell an asset to charity for both:
- More than you paid for it.
- Less than market value.
Work out your gain using the amount the charity actually pays you, rather than the value of the asset.
For more on Capital Gains Tax you can also head over to: www.gov.uk/capital-gains-tax/gifts
Please note that this information is only a general guide and your personal circumstances may differ. Professional advice is therefore recommended to ensure you are getting the best possible guidance. If you would like to discuss further, please don’t hesitate to contact us.