Selling a second property? Thinking of cashing in a share portfolio? Capital Gains Tax (CGT) can sting – especially if you’ve made a decent return on your investments. But there’s a silver lining for couples: splitting or gifting assets to your spouse or civil partner can cut your CGT bill, sometimes quite significantly.

Let’s break down exactly how this works, when it makes sense, and the key things to watch out for.

First, What Is Capital Gains Tax (CGT)?

CGT is what you pay when you sell or gift certain assets that have gone up in value – shares, second homes, valuable antiques, you name it. It’s charged only on the profit, not the total sale price. So if you bought a painting for £2,000 and sell it for £10,000, CGT is due on the £8,000 gain.

You’ll usually pay CGT on:

• Shares outside an ISA or pension
• Second properties (not your main home)
• Valuables worth over £6,000 (e.g. art, jewellery, classic cars)
• Business assets

The current CGT-free allowance is £3,000 per person (2025/26) – halved from previous years – which means managing CGT has become more important than ever.

So, Can You Reduce CGT by Gifting Assets to Your Spouse?

Yes – and here’s why it works.

If you’re married or in a civil partnership (and living together), you can gift assets to your partner tax-free, and they take on your original cost base. So when the asset is eventually sold, both of your CGT allowances can be used – doubling your tax-free buffer to £6,000 (or more if you spread the sale over multiple tax years).

Quick Example:

Let’s say you’re selling shares with a gain of £10,000:

• If you sell them yourself, £3,000 is tax-free, and the remaining £7,000 is taxable.
• If you gift half to your spouse and you both sell, each of you uses your £3,000 CGT allowance.
• Only £4,000 is taxable instead of £7,000 – a clear tax saving.

And if one of you pays tax at a lower rate, there could be even more benefit – because the rate of CGT is higher for higher-rate taxpayers (currently up to 24% for most assets).

The Rules You Need to Know

• You must be married or in a civil partnership – long-term partners who aren’t officially joined up don’t qualify.
• You must be living together at the time of the transfer.
• The gift must be unconditional – once given, it’s theirs.
• ⚖️ Your partner inherits your cost basis – they take on the original purchase price for tax purposes.
• It must be a genuine gift – not something you’re just holding on their behalf.

⚠️ Important: If your relationship breaks down, the asset is theirs. No take-backs. So think twice before handing over that valuable painting or chunk of shares if things feel rocky.

Other Ways to Reduce Your CGT Bill

If splitting with your partner isn’t the right option (or you want to go further), there are a few other tax-savvy strategies to consider:

1. Stagger the Sale Over Tax Years

Sell part of an asset on 5 April and the rest on 6 April – you’ll then benefit from two tax years’ worth of CGT allowance.

2. Offset Losses Against Gains

Made a loss on a dodgy stock pick? You can use that to reduce your CGT bill on another gain. Just remember to declare the loss to HMRC, even if you don’t need to do a full tax return.

3. Use an ISA or Pension to Shelter Future Gains

Consider selling shares and buying them back inside an ISA (this is called a Bed and ISA). It resets the cost base and shelters future growth from CGT.

You can do the same with pensions too, especially if you’re approaching retirement and can benefit from tax relief.

4. Time the Sale Around Income

Your CGT rate is linked to your income tax band. So if your income drops in a particular year (e.g. you’re on maternity leave or between jobs), it could be a good time to sell and pay less CGT.

When Splitting Assets Makes the Most Sense

Splitting assets with your partner is especially useful if:

• You’re both basic-rate taxpayers – and want to fully use both CGT allowances.
• Your partner pays a lower rate of tax than you.
• You’re selling a second home or big investment.
• You want to spread the gain across more than one person for strategic selling (e.g. across two tax years).

When It Might Not Be Worth It

While it’s a handy tool, it’s not always right for every situation.

You might want to skip it if:

• You’re not in a stable relationship (splitting ownership is a big commitment).
• Your partner doesn’t want the legal responsibility of owning part of the asset.
• The gain is within your personal allowance already (no need to complicate it).
• Your spouse is already using their full CGT allowance elsewhere.

Final Thoughts

Capital Gains Tax can feel like a sneaky penalty on good financial decisions – but with a little planning, you can soften the blow. Splitting assets with your spouse or civil partner is a completely legal, HMRC-approved way to reduce your tax bill. Just be sure you understand the rules – and the risks – before you move money or property around.

And if your assets are sizeable or your situation is a bit more complex? Speak to a financial adviser or tax professional. A short conversation could save you thousands in unnecessary tax.

TL;DR

• ✅ Yes, gifting assets to your spouse/civil partner can reduce CGT.
• You each get a £3,000 allowance = £6,000 together.
• Share assets, stagger sales, or use losses and ISAs to cut the bill.
• Only works if you’re married/in a civil partnership and living together.
• ⚠️ Once you’ve gifted an asset, it’s theirs – so be 100% sure before doing it.

Don’t pay more tax than you need to – plan smart, not last minute.