You can give almost anything to your spouse or civil partner without triggering a penny of Capital Gains Tax or Inheritance Tax. The tax system treats married couples and civil partners as a single economic unit in important ways — and once you understand the rules, you can use them to make full use of two sets of allowances instead of one. This is one of the few genuinely simple, fully legitimate pieces of tax planning available to ordinary UK households.
The two rules that make this work
There are two separate tax reliefs at play, and they cover two different taxes.
For Capital Gains Tax (CGT), any transfer of an asset between spouses or civil partners who live together is made on a "no gain, no loss" basis. That means the transfer itself produces no taxable gain and no allowable loss — there is simply no CGT to pay when you move the asset across. The receiving spouse takes over the original base cost (broadly, what the giving spouse originally paid for it).
For Inheritance Tax (IHT), transfers between UK-domiciled spouses and civil partners are exempt without limit — the "spouse exemption". Whether you give an asset away during your lifetime or leave it on death, there is no IHT on transfers to your spouse, however large.
Together, these rules let couples move assets between themselves freely and then plan around each person's individual allowances.
| Capital Gains Tax (CGT) | Inheritance Tax (IHT) | |
|---|---|---|
| Treatment of inter-spouse transfer | "No gain, no loss" | Spouse exemption — exempt |
| Limit | No CGT on the transfer; receiving spouse takes over original base cost | Unlimited (no cap) |
| Condition | Must be living together in the tax year | Both UK-domiciled spouses / civil partners |
| Allowance unlocked | Both £3,000 annual exempt amounts (£6,000 a couple, 2026/27) | Lets assets pass to survivor tax-free on first death |
"No gain, no loss" for CGT, explained
Normally, when you dispose of an asset that has risen in value — shares, a second property, units in a fund — you compare the sale proceeds (or market value, for a gift) with what you paid, and any profit above your annual exempt amount is taxed.
Between spouses, that comparison is switched off. The law treats the transfer as happening at a value that produces neither a gain nor a loss. So if you bought shares for £10,000 and they are now worth £25,000, transferring half to your spouse does not crystallise the £7,500 of growth on that half. Instead, your spouse inherits your original cost. When they eventually sell, their gain is measured from your original purchase price, not the value on the day you gave it to them.
This only applies where you are living together in the tax year. If you have permanently separated, the no gain, no loss treatment stops applying after the end of the tax year of separation, so timing matters during a breakup.
The unlimited IHT spouse exemption
The IHT spouse exemption is one of the most generous reliefs in the whole tax code. Gifts between UK-domiciled spouses and civil partners are exempt from Inheritance Tax with no cap at all. That is why most married couples pay no IHT when the first partner dies — everything simply passes to the survivor tax-free.
This matters for the planning below too: because you can shift assets between you without any IHT cost, rebalancing who owns what is never an IHT problem for a married couple. The exemption gives you complete freedom to put assets in the right name.
Using both CGT annual exempt amounts
Every individual has their own CGT annual exempt amount — the slice of gains you can realise each year tax-free. For 2026/27 it is £3,000 per person. A married couple therefore has £6,000 of tax-free gains between them each year, but only if the gains are spread across both people.
If one spouse owns an asset outright and sells it, only their single £3,000 is available — the other spouse's allowance is simply wasted. By transferring a share of the asset first (on a no gain, no loss basis), the eventual sale produces gains in both names, so both £3,000 allowances can be used.
If you want a refresher on how the gain itself is worked out, see our guides on how much Capital Gains Tax you pay and Capital Gains Tax on shares.
Worked example: splitting a share portfolio before a sale
Priya owns a portfolio of listed shares in her sole name. She bought them years ago for £20,000 and they are now worth £40,000, so there is a £20,000 gain sitting in the holding. She wants to sell the whole lot to fund a house deposit. Her husband, Sam, has no other gains this year.
If Priya sells everything herself:
- Gain: £40,000 − £20,000 = £20,000
- Less her annual exempt amount: −£3,000
- Taxable gain: £17,000
If Priya first transfers half the shares to Sam, then they each sell their half:
- The transfer to Sam is no gain, no loss — no CGT on it, and Sam takes over £10,000 of base cost.
- Priya's half: £20,000 proceeds − £10,000 cost = £10,000 gain, less her £3,000 = £7,000 taxable.
- Sam's half: £20,000 proceeds − £10,000 cost = £10,000 gain, less his £3,000 = £7,000 taxable.
- Combined taxable gain: £14,000.
By splitting first, the couple shelter a second £3,000 — reducing the taxable gain from £17,000 to £14,000. If Sam is a basic-rate taxpayer and Priya a higher-rate one, the saving can be larger still, because more of the gain is then taxed at the lower CGT rate in Sam's hands. The key is that the transfer happens before the sale is committed.
Using both income tax bands
The same logic applies to income-producing assets such as shares paying dividends, interest-bearing savings, or a rental property. Income is taxed on whoever owns the asset, so if all the income lands on one spouse it can be pushed into a higher tax band while the other spouse's allowances and lower bands go unused.
Each individual has their own £12,570 personal allowance (frozen until 5 April 2031) and their own basic-rate band up to the £50,270 higher-rate threshold. By transferring income-producing assets to the lower-earning spouse, more of the income can be taxed at 0% or basic rate rather than 40%.
A common example is rental property: shifting a share of a buy-to-let to a non-earning or basic-rate spouse can move the rental profit into a lower band. There are extra formalities for property held jointly by a married couple (HMRC's default 50:50 split and the Form 17 election), so read our guide on declaring rental income on self assessment before you act. Similarly, dividends are taxed on the registered shareholder, so the name on the share register drives the tax — see how dividend tax works.
The outright-gift requirement — don't get this wrong
The reliefs only work if the gift is outright and unconditional. You have to genuinely give the asset — and the income or future gains that come with it — to your spouse. You cannot keep control, attach strings, or expect the money to flow back to you.
If the transfer is not a real gift (for example, you transfer shares to your spouse but quietly keep the dividends, or there is an understanding that they will hand the asset back), HMRC can treat the income as still belonging to you under the "settlements" anti-avoidance rules, and the planning fails. The transfer must be of the whole beneficial interest in the asset, not just the legal title or an income stream.
In practice this means documenting the transfer properly, updating the share register or the Land Registry, and accepting that your spouse now owns their share for real. For most couples that is no obstacle — but it is the line between legitimate planning and an arrangement HMRC will unwind.
Practical points and timing
- You must be living together in the tax year for the no gain, no loss rule to apply. Plan transfers carefully around separation or divorce.
- Transfer before you sell. Splitting an asset after you have already sold it does nothing — the gain has already arisen in one name.
- Mind the deadlines. If you are realising gains to use this year's £3,000 allowances, the disposal must complete within the tax year; the annual exempt amount cannot be carried forward.
- Keep records. Note the original base cost that carries over, so the receiving spouse can calculate their gain correctly on a future sale.
- Civil partners count equally. Everything here applies identically to civil partnerships.
When this won't help
Inter-spouse planning is powerful but not a cure-all. It does nothing if both spouses are already higher-rate taxpayers with their allowances fully used. It does not apply to unmarried couples — cohabitees do not get the no gain, no loss treatment or the IHT spouse exemption, so a transfer between them is a normal disposal at market value for CGT and a potentially taxable gift for IHT. And it cannot conjure relief where there is no gain or income to shelter. As always, the planning should follow a genuine commercial or family reason, not exist purely on paper.
Sources
- GOV.UK — Capital Gains Tax: gifts to your spouse or civil partner
- GOV.UK — Capital Gains Tax allowances (Annual Exempt Amount)
- GOV.UK — Inheritance Tax (spouse and civil partner exemption)
- GOV.UK — Income Tax: introduction
- GOV.UK — Marriage Allowance
Frequently asked questions
Do I pay Capital Gains Tax when I transfer shares to my spouse?
No. Transfers of assets between spouses or civil partners who live together are made on a no gain, no loss basis, so no CGT arises on the transfer itself. Your spouse takes over your original base cost, and a gain is only worked out when they later sell the asset — measured from what you originally paid.
Is there a limit on the Inheritance Tax spouse exemption?
No. Transfers between UK-domiciled spouses and civil partners are exempt from Inheritance Tax without any limit, whether made during your lifetime or on death. That is why most married couples pay no IHT when the first partner dies and everything passes to the survivor.
How much can a married couple save by splitting gains?
Each person has their own CGT annual exempt amount of £3,000 in 2026/27, so a couple can realise £6,000 of gains tax-free between them rather than £3,000. By transferring a share of an asset before selling, both allowances are used, and if one spouse pays tax at a lower rate, more of the gain can be taxed at that lower rate too.
Does the gift to my spouse have to be permanent?
Yes. The transfer must be an outright, unconditional gift of the whole beneficial interest — including the future income and gains. If you keep control, attach strings, or expect the asset back, HMRC can treat the income as still yours under the settlements rules and the planning fails.
