CGT on in specie transfer
Jenni
Member
Hi all, typical Friday afternoon brain freeze here...
We have some clients wanting to gift £5m from their unwrapped investment account to their adult daughter, which we're considering doing part of as an in specie transfer to a new account in the daughter's name (wrappers TBC at this point as we have no info on their other wealth at present). This would be to retain the investments and reduce frictional trading costs as we manage the funds on a discretionary basis. The clients have many many millions, so affordability isn't a concern here.
The investment platform provider has confirmed they could do this transfer, but has said the shares/funds would be transferred at current market value, effectively wiping out any unrealised gains the clients may have on them. The gains/losses would be reset to zero and would then become taxable on their daughter as and when realised.
I am pretty sure that the gains cannot be wiped out this way and a gift by way of transfer would be treated as a disposal for CGT purposes as the ownership of the assets is changing. However, they're adamant they're correct so now I'm doubting myself!
Can anyone help?
Thanks
Jenni
Comments
There's some confusion there - the transfer will, of course, be at current market value, but that doesn't mean the cost price will alter from the original source.
You can't gift to a child to avoid CGT. There is an inter-spouse exemption as you probably know, but that doesn't avoid CGT when the spouse sells (but could benefit from a reduction since there's a new person's allowance to use).
Thanks both, my Friday brain clearly wasn't thinking straight!