Connected
persons
Spouses and
civil partners are connected with each other per S286(2) TCGA92, as well as
with each other's relatives, as defined in S286(8) TCGA92, see CG14580.
S18
TCGA92 treats any transfer between connected persons as a transaction otherwise
than by way of a bargain at arms length. Unless S58 TCGA92 applies, see below,
S17 TCGA92 provides that the deemed consideration on the transfer is the market
value of the asset transferred on the date of the transfer.
No
gain/no loss treatment
Any
transfer of an asset between spouses or between civil partners of each
other who are living together is treated, with certain exceptions, by S58
TCGA92 as taking place for such consideration as will give neither a gain nor a
loss to the transferor.
How
this rule works is explained in more detail at CG22200.
Jointly
owned assets
Whether the legal title to an asset
is held by one or both of a married couple or by one or both of the civil
partners within a civil partnership, the beneficial ownership of that asset is
a question of fact. If you need to decide who is chargeable to Capital Gains
Tax on the disposal of an asset by a spouse or by a civil partner you should
consider the evidence available to determine which of them is the beneficial
owner, or if both of them have a beneficial interest in the asset, what share
each of them has.
Factors that may be helpful in
determining beneficial interest include:
·
whether
Form 17 has been submitted,
·
who
provided the cost price and received the disposal proceeds,
·
whether
the asset was the couple's home.
Form 17
If the beneficial ownership of an
asset is divided other than equally between the couple and the split of the
beneficial ownership of both the asset and the income from it is identical, the
couple can make a declaration under S837 Income Tax Act 2007 on Form
17 stating what that split is.
If such a declaration has been made
you should treat it as evidence of the existence of an express agreement
concerning the ownership of the asset and you should follow that split in
assessing the gains on the disposal of that asset.
A couple cannot make a declaration
where the split of beneficial ownership of the asset and of the income from it
differ.
A declaration is not mandatory, and
so you should not take the absence of a declaration as being evidence that the
beneficial ownership is split evenly. However, you should follow the advice
below if there is no declaration and no claim is made that the beneficial
ownership is unevenly divided.
Cost contributions and disposal proceeds
If one spouse or civil partner paid
all of the cost of the asset and it is held in the name of that spouse or civil
partner alone it may be assumed, in the absence of evidence to the contrary,
that he or she is the sole beneficial owner. This assumption may be wrong if
the asset was acquired as a gift for the other spouse or civil partner,.
Similarly, if the disposal proceeds
are retained by one spouse or civil partner it may be evidence that he or she
was the sole beneficial owner of the asset which was disposed of.
Other considerations
The Courts have substantial powers
to recognise the equitable interest of a spouse or civil partner in the
matrimonial or civil partnership home to the extent of their contribution to
providing that home. You should not overlook the possibility that a spouse or
civil partner has an equitable interest in a home to which he or she has no
legal title. This is covered in more detail at CG65310+.
If no factual evidence is available
to determine each spouse's or civil partner's beneficial interest in an asset
you should assess the spouse or civil partner with legal title, or if they have
joint legal title, assess each of them as a holder of a half interest in the
asset.