From: Ronald Raygun 
Subject: Re: weird question: avoiding CGT by gifting to dying spouse
Newsgroups: uk.finance
Date: Sat, 04 Nov 2006 18:22:29 GMT

John Boyle wrote:

> In message , Ronald
> Raygun  writes
> 
>>There is a string attached to the transfer between spouses by gift.
>>If A owns the asset and gives it to B, and B then sells it, B is
>>treated as having acquired it at the same time and at the same cost
>>as A originally acquired it, so you can't get out of CGT that way.
>>But A could gift a half share in the asset to B, and then if they
>>jointly sell it, two annual CGT exempt amounts could mitigate any
>>tax payable.  They might even sell the asset in two instalments,
>>straddling a tax year boundary, and get four exempt amounts that way.
>>
>>I'm not sure whether the tax-free transfer between spouses by bequest
>>(or alternatively by intestacy or by joint ownership) has the same
>>string attached.  It might be that if A dies and B inherits the asset,
>>the asset is still treated as having been acquired at A's original
>>time and cost.
> 
> No, B will be deemed to have acquired it at the value it was on A's
> death.

OK, so there would be merit in doing what the OP suggests, provided
the object of the exercise is that the surviving spouse can sell the
asset free of CGT after the first spouse's death.  If the aim is to
benefit *other* heirs, it would not generally be a good idea.

>> Normally bequests to non-spouses are treated as
>>having been acquired by the heirs at date of death and at their market
>>value at time of death, and payment of IHT (if due) cancels any
>>pre-existing CGT liability.  I'm not sure whether spousal bequests
>>get "double" exemption.  I suspect they may well not.
> 
> No.

That's "No." as in "Yes they will.", is it?