The taxes you pay on gifts
Gift law and Capital Gains Tax (CGT)
Gift tax law can affect your liability to pay Capital Gains Tax (CGT). Normally, you have to pay CGT on the capital gain you make when an asset is disposed of. However, if the property was gifted to a person, you may be exempt from paying CGT on the disposal.
The rules that apply to Capital Gains Tax are different depending on your relationship to that person:
- Gifts to your spouse or civil partner
- Gifts to a ‘connected person’
- Gifts to charity
Gifts to your spouse or civil partner
You don’t have to pay Capital Gains Tax when you give a gift to your husband, wife or civil partner if certain criteria are met. You must have lived together for at least part of the tax year in which you made the gift. And also, the gift must not be ‘trading stock’ (trading goods bought for resale).
There are also rules about when the assets can then be sold by your spouse/civil partner. If the rules are not followed, you could end up having to pay tax.
It is highly advisable to get legal advice from a tax solicitor and/or family solicitor before disposing of any assets in this way. There may be better ways to make the transfer.
Gifts to a ‘connected person’
If you give a gift to a ‘connected person’, such as your brother, sister, child, parent, grandparent, mother-in-law or business partner, you may need to pay tax, but at a different level. You should consult a tax solicitor about this.
Gifts to charity
If you make a gift of shares to a registered UK charity, you won’t have to pay Capital Gains Tax.
What if you are investigated about your tax?
As there many influences on gift tax law, the help and advice of a tax solicitor can be vital in clarifying your position. Whilst using a solicitor costs money, the amount you save in tax could be well worth it!
We can put you in touch with a solicitor today, who can advise you what to do.
If you would like to obtain legal advice about taxes on gifts, Contact Law can put you in touch with a local specialist tax law solicitor free of charge. Please call us on 0800 1777 162 or complete the web form above and we’ll call you back.
