A transfer of assets between husband and wife does not count as a disposal for tax purposes, and on transfer one spouse is deemed to take over the base cost of the other.
This is important because, with a bit of thought, you can arrange ownership of your shares to ensure that income and gains arrive in the right hands for tax purposes.
In particular, you should make sure that both you and your spouse have enough gains to take full advantage of your individual CGT exemptions.
Example
Bad Planning
X has gains of £8,900, and his wife Y has gains of £9,900. X pays no CGT and has not fully used his CGT exemption, while Y will pay tax on £300, having exceeded her exemption.
Example
Good Planning
In the same situation, Y could have transferred enough of her shares to X to increase his gains to £9,200 and reduce hers to £9,600, so that both would have fully used their exemptions and neither would have paid CGT.
Note that in the first example X would not be allowed to transfer his unused exemptions to Y and argue that, in aggregate, they did not exceed their £19,200. Husbands and wives get individual exemptions of £9,600, not a joint exemption of £19,200.
When you make a gain over and above your annual exemption, it is added to your other income and you are taxed on it at whatever rate applies to that band of income. So the amount you get hit for is determined as much by your other income as by the amount of the gain per se.
This is another reason why it is important for spouses to make sure that shares are held in the right hands. If X is earning more than £36,000, and Y is earning £10,000, they are better off having the gain land in Y's lap rather than X's because then it will only be taxed at 22% as opposed to 40%.
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