CG22240 - Transfer of assets: between spouses or between civil partners: examples
Example 1
Example 2 - part disposal
Example 1
TCGA92/S58
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:
| - | Amount |
|---|---|
| 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 |
| - | Nil |
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:
| - | Amount |
|---|---|
| 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 spouse Ms D.
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 Ms D, is
| - | - | - | £ |
|---|---|---|---|
| £25,000 | x | £60,000 | 15,000 |
| - | - | £60,000 + £40,000 | - |
| Deemed consideration | - | - | 15,000 |