Published On: Fri, Mar 15th, 2024

HMRC explains capital gains tax rules after query about PIP claimants | Personal Finance | Finance

has clarified how works after a taxpayer asked about transferring shares.

The person contacted the tax authority over X to ask: “If shares are transferred from husband to wife and the wife doesn’t work and is on PIP, would she pay capital gains tax on anything up to or over £6,000 if she sold them?”

In response, a HMRC representative said that there would be no tax to pay by the husband in transferring the shares to his wife, as they are classed as “connected persons”, so the funds can be moved with no gain or loss.

However, they warned that the wife could land a tax bill further down the line. They said: “The wife would be subject to capital gains tax if she subsequently disposes of the shares and realises a gain.

“If the gain exceeds her £6,000 annual exempt amount for capital gains, capital gains tax will be due on the amount over the £6,000.

“Personal allowances cannot be used against capital gains, because it has its own separate annual exempt amount for capital gains tax.”

The capital gains tax allowance is decreasing from the start of the new tax year, from £6,000 to £3,000.

However, Chancellor Jeremy Hunt announced in his Spring Budget there would be a cut to the levy in the new financial year.

The rate paid by higher or additional taxpayers on residential property is to drop from the current 28 percent to 24 percent.

The Chancellor said the move would actually increase receipts, with economist Arun Advani saying “would like to see the workings” on this prediction.

He said: “Sure we might have more transactions, but if someone always owns the asset, not sure how it increases revenue.

“I think the point is that we get less money in total, but more within the scorecard window. Need to look at in more detail, but seems very short term thinking.”

Nicky Stevenson, managing sirector at Fine & Country, said the cut in the tax could help stimulate the housing market.

She explained: “Reducing the higher rate of Capital Gains Tax should inject some extra energy into the housing market by increasing the number of properties for sale.

“Teetering landlords unsure about whether to take the plunge and sell their property will be encouraged by this announcement.

“This should offer hope for first-time buyers who are the foundation of the property market, but have been hit particularly hard by high interest rates.”

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