Question
Is it beneficial for my wife to sell her portfolio of shares to me and thus offset her loss (currently around 13k GBP) against tax paid on her part time earnings?Answer
Gains and losses on shares fall under the capital gains tax regime, not income tax. This means your wife can’t unfortunately offset any losses against her earnings.
For what it’s worth she could sell the shares to realise the loss, which can then be offset against gains in future years. To do this she must notify HMRC about the loss (usually via a tax return, within five years after the 31 January following the end of the tax year in which the loss arose).
However, I don’t think that makes much sense in her current position unless she wants to sell the shares anyway. Assuming she holds onto them the current loss will automatically offset gains as the shares (hopefully) rise in price. Plus, if she ends up in profit, gains can be offset against her annual capital gains tax allowance, currently £10,100.
If the shares do end up making bumper profits one day then it might be wise for your wife to transfer some of the shares to you (you don’t need to sell them, just use a stock transfer form), so that you can both use your annual allowances to avoid capital gains tax .
You don’t have to pay capital gains tax when passing assets (e.g. shares) to a husband, wife or civil partner. So if you’re worried that selling will trigger gains above your allowance it’s a good idea to first spread the investment between you, so you can use both allowances when you sell.
Is it beneficial for my wife to sell her portfolio of shares to me and thus offset her loss (currently around 13k GBP) against tax paid on her part time earnings?Answer
Gains and losses on shares fall under the capital gains tax regime, not income tax. This means your wife can’t unfortunately offset any losses against her earnings.
For what it’s worth she could sell the shares to realise the loss, which can then be offset against gains in future years. To do this she must notify HMRC about the loss (usually via a tax return, within five years after the 31 January following the end of the tax year in which the loss arose).
However, I don’t think that makes much sense in her current position unless she wants to sell the shares anyway. Assuming she holds onto them the current loss will automatically offset gains as the shares (hopefully) rise in price. Plus, if she ends up in profit, gains can be offset against her annual capital gains tax allowance, currently £10,100.
If the shares do end up making bumper profits one day then it might be wise for your wife to transfer some of the shares to you (you don’t need to sell them, just use a stock transfer form), so that you can both use your annual allowances to avoid capital gains tax .
You don’t have to pay capital gains tax when passing assets (e.g. shares) to a husband, wife or civil partner. So if you’re worried that selling will trigger gains above your allowance it’s a good idea to first spread the investment between you, so you can use both allowances when you sell.
Read this Q and A at http://www.candidmoney.com/questions/question116.aspx
No comments:
Post a Comment