If you are married and your capital gains are expected to exceed the annual CGT exemption, you can transfer some of your shares to your spouse to use up his or her allowance.
Transfers between married partners are tax-free. If both spouses hold portfolios, they may wish to check each year to see if one carries a higher potential CGT liability than the other and rebalance the portfolios more evenly.
In some cases investors genuinely want to sell shares to adjust their portfolio. More often, however, advisers recommend investors update the value of some of their shares towards the end of the tax year. This used to be a comparatively straightforward exercise through a technique known as "bed-and-breakfasting", where you sold shares one day and repurchased the next in order to crystallise a capital gain, which could be offset against the annual CGT exemption.
The B&B tax avoidance loophole was closed in the 1998 Budget and you now have to wait one month before you can repurchase the same shares if the intention is to crystallise a gain to offset against your CGT exemption. Clearly, the market price of the shares can change significantly during that time.
There is nothing to stop you from buying shares in a similar company to maintain the balance of your portfolio. However, if you want to hang on to those particular shares it is possible for your spouse to buy the same quantity once you have sold. The ownership has changed hands but you retain the same portfolio within the family, as it were. Do seek advice though - HMRC dislikes this type of tax avoidance technique.
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