Gifts are subject to capital gains tax.

Because you are disposing of an asset when you transfer it to someone, you may have to pay capital gains tax (CGT). The restrictions vary depending on who you're giving the present to. A gift comprises selling something for less than its market value for this purpose.

When I give an asset to my spouse/civil partner, do I have to pay CGT?

No, you don't have to pay CGT if you give something to your spouse, wife, or civil partner if each of the following conditions is met:

• you shared at least part of the tax year in which the gift was made; and

• It is not a gift of 'trading stock' (trading goods bought for resale).

However, if your husband, wife, or civil partner later sells or otherwise disposes of the asset, they will be responsible for paying tax on any gain realised for the whole term of ownership, beginning with the date you first obtained it (or 31 March 1982, if later). In other words, the asset is treated as belonging to the recipient spouse or civil partner from the time the transferring spouse acquired it.

Read our article on what happens when a marriage or civil partnership ends if you are separated, divorced, or your civil partnership has been dissolved.

Keep track of how much the asset cost you, as your spouse or civil partner may require this information to figure out their CGT when they sell it.

If I give a present to another family member, do I have to pay CGT?

You must calculate the gain or loss when you provide a present to a family member or other person with whom you are 'related' (as defined below) - other than your spouse or civil partner, as indicated above. This also applies if you give them an asset in any other way, such as selling it to them for less than it is worth.

In certain circumstances, you may have to calculate the gain or loss using the asset's market value rather than the value of the actual cash you get.

You may have to pay CGT if you make a capital gain.

You can only deduct losses from gains on gifts or other disposals to the same person if you make a loss on a gift to a linked person. Clogged losses are what they're called.

Best Croydon Chartered Accountant provides bookkeeping, taxation and accounting services to a wide range of businesses in the area of Croydon.

The preceding is not the same as a low-cost commercial transaction. For example, you might sell a property to a property buying company that offers you less than the full market value in order to get a rapid sale. In this case, the proceeds would be the real amount you receive, presuming you have no ties to the property-buying firm.