Capital Gains Tax Changes
Opportunity to Lock-in Indexed Gains.
Indexation is to be abolished from 6th April 2008.
However, if stock is transferred on a spouse to spouse basis before the 5th of April, the receiving spouse’s book cost will become the current indexed cost.
The benefit of indexation will therefore be retained with no CGT issues on the transfer - inter-spouse transfers being on a no gain/no loss basis.
Please note that whilst HMRC have verbally confirmed that spouse to spouse transfers involving a 31st March 1982 holding will qualify for the indexation allowance to be locked in, this will require a change in the law when the new rules are introduced as current legislation does not allow this.
Advice should be sought if at anytime the transfer of holdings back to the original spouse is contemplated and in any event this should not happen within a 30 day period of the original transfer as an absolute minimum.
If you require advice, please contact your investment manager.
