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Find out more'Can I give my children shares without triggering a tax bill?'
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I’ve been reviewing my tax position due to the reduction of the dividend allowance and the capital gains tax-free allowance.
In the 2023-24 tax year, I moved shares into my Isa and also gifted some of my shares to my adult children.
I was under the impression that as the shares were staying within the family, this wouldn’t trigger capital gains tax. Is this correct?
A Which? Money member
'HMRC treats giving shares away as if you've sold them'
Samm Galloway, Which? Money expert, says...
Unfortunately, giving shares to your children will also count as a disposal for the purposes of capital gains tax (CGT), so could lead to a bill.
This depends whether the 'profit' (the difference between what you bought the shares for, and what they were worth when giving them to your children, minus costs) is more than the tax-free CGT allowance.
This was £6,000 at the time you moved them (it has since fallen to £3,000).
So if the shares had increased by £7,000 you'd be facing a capital gains tax bill on £1,000 of that - the rate would depend on your other income.
You can transfer some of your shares to your spouse or civil partner free of CGT
Bear in mind that your transferring of shares into your stocks and shares Isa will count as a disposal for the purposes of CGT, so will further eat into your allowance.
You will need to use the market value of the shares at the point of disposal, compared with the cost when you acquired them, when calculating the gain.
You can transfer some of your shares to your spouse or civil partner free of CGT. Then your spouse could put them into an Isa or give them to your children, using their own tax-free allowance.
Bear in mind your spouse will be deemed to have acquired those shares at the same price that you acquired them, not the market value at the time of transfer.
As you complete a self-assessment tax return, you will need to report the disposal on the CGT pages if your gain was greater than the CGT allowance or if the total amount you got paid for the shares was more than £50,000.
Whether you giving shares to your children could end in an inheritance tax bill depends on how much you've given them and when.
- Find out more: Capital gains tax rates and allowances
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