Bill & Mary both have large portfolios of shares that have built up over many years thru' their taking dividends as new shares.
If either of them sell today there will be a big CGT hit as well as the difficulty of going back over the years to establish the acquisition values.
Although Bill is very ill, he can take lucid decisions on the portfolios. He explains to Mary that as his death is imminent she
should transfer all her shares to him. Soon after the transaction, he dies & the shares, both his and hers go back to Mary under the terms of his will.
Both her transfer to him & the transfer back are free of both CGT & IHT, since it's between spouses.
Will this plan rebase the value of Mary's shares to what they were worth at Bill's death?
If so, could she now sell them with little or no CGT.
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CGT & Imminent Death
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- Lemon Quarter
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Re: CGT & Imminent Death
Yes her base cost will be the value at the date of his death and she would only pay CGT on the increase in value from that date.
This is one of the things the OTS suggested should be changed, ie where there is no IHT assets should transfer at original cost rather than probate value
This is one of the things the OTS suggested should be changed, ie where there is no IHT assets should transfer at original cost rather than probate value
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- Lemon Slice
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Re: CGT & Imminent Death
Does possibility of 30-day matching of her acquisitions with her prior disposals not apply?scrumpyjack wrote:Yes her base cost will be the value at the date of his death and she would only pay CGT on the increase in value from that date.
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- The full Lemon
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Re: CGT & Imminent Death
scrumpyjack wrote:This is one of the things the OTS suggested should be changed, ie where there is no IHT assets should transfer at original cost rather than probate value
I am in two minds about that.
On the one hand it is ridiculous that spouses should have to jump through such hoops in order to preserve the long-established principle that spouses can structure their affairs to minimise tax.
On the other hand, closing this "loophole" would just cause spouses to have to jump through even more artificial transactions to maintain their tax position.
JonE wrote:scrumpyjack wrote:Yes her base cost will be the value at the date of his death and she would only pay CGT on the increase in value from that date.
Does possibility of 30-day matching of her acquisitions with her prior disposals not apply?
Does the 30-day rule apply to gifts as well as purchases and sales?
I would have thought that any transaction that is tax-free (which transfers between spouses are) would not be subject to the 30-day rule just like, say, bed-and-ISA transactions are not.
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- Lemon Quarter
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Re: CGT & Imminent Death
Raheen wrote:Bill & Mary both have large portfolios of shares that have built up over many years thru' their taking dividends as new shares.
If either of them sell today there will be a big CGT hit as well as the difficulty of going back over the years to establish the acquisition values.
Although Bill is very ill, he can take lucid decisions on the portfolios. He explains to Mary that as his death is imminent she
should transfer all her shares to him. Soon after the transaction, he dies & the shares, both his and hers go back to Mary under the terms of his will.
Both her transfer to him & the transfer back are free of both CGT & IHT, since it's between spouses.
Will this plan rebase the value of Mary's shares to what they were worth at Bill's death?
If so, could she now sell them with little or no CGT.
She should only transfer to him shares showing a profit. If she transfers shares showing a loss, the loss will be lost for CGT purposes on his death. Also he should transfer to her any shares of his showing a loss, so she can use the loss in future, otherwise similarly the loss is lost.
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