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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Transfer of assets: between husband and wife or between civil partners: examples

Example 1


Mr Smith bought an asset for £5,000 in March 1984. He sold the asset to his wife for

£50,000 in September 1989 when they were living together. The asset is deemed to have been transferred for an amount which gives neither a gain nor a loss on transfer. The actual amount paid by Mrs Smith is ignored.

The deemed disposal proceeds are calculated as follows:

Cost £5,000
plus indexation allowance March 1984 to September 1989 £5,000 x 0.333 £1,665
Deemed disposal proceeds £6,665
less cost £5,000
Unindexed gain £1,665
Indexation allowance £1,665

Mr Smith has neither a gain nor a loss. The deemed cost to Mrs Smith for any future disposal of the asset is £6,665.

Mrs Smith sells the asset for £20,000 in June 2013.

The gain arising is:

Disposal proceeds £20,000
minus cost £6,665
Chargeable gain £13,335

Please note that Indexation Allowance has been abolished for CGT purposes for disposals made on or after 6 April 2008 but may still be allowed in computing the deemed disposal proceeds on no gain/no loss transfers at an earlier time. Indexation Allowance was frozen in the computation of chargeable gains accruing on or after 6 April 1998. So Indexation Allowance is computed only to April.

Example 2 - part disposal

Mrs C bought an asset for £25,000 in June 2003. In May 2012 she disposed of part of that asset to her husband.

The following valuations have been agreed

  • value of part disposed of at May 2012 @60,000
  • value of part retained at May 2012 @40,000.

The deemed consideration on the disposal, and so the cost to Mr C, is

£25,000 x £60,000 15,000
    £60,000 + £40,000  
Deemed consideration     15,000