If you’re married and own a UK business, transferring shares to your spouse can be a smart financial move with plenty of perks. From planning for the future to improving tax efficiency or rebalancing your portfolio, the benefits are hard to ignore. And thanks to UK tax rules, you won’t pay Capital Gains Tax (CGT) on shares gifted or transferred to your spouse or civil partner.

But while there are many positives to transferring shares to your partner, it’s also important to be aware of the potential downsides - like loss of control - and understand what might happen if you and your spouse ever separate.

Plus, as with most financial decisions, transferring shares to your spouse isn’t as simple as signing on the dotted line and calling it a day. There are processes to follow, tax implications to consider and rules you need to be aware of to stay on the right side of HMRC.

In this article, we’ll guide you through the essentials of transferring shares to your spouse, from the "why" to the "how." Let’s start with the key reasons you might want to consider transferring your shares:

Why transfer shares to your spouse?

Here are some of the main reasons couples transfer shares to each other:

1. Tax efficiency

The UK tax system treats spouses and civil partners as a single financial unit in some ways, allowing them to transfer assets like shares between each other without incurring Capital Gains Tax (CGT). 

This can also be a big financial bonus if one partner pays a lower rate of Income Tax or has unused allowances.

For example:

• Your spouse could receive dividend payments taxed at their lower rate.
• Capital gains can be distributed between both partners to make better use of individual allowances.

2. Planning for the future

Planning for the future often means ensuring both you and your partner share ownership of key assets. Transferring shares can simplify inheritance arrangements and reduce potential tax liabilities later down the line.

3. Rebalancing portfolios

If you hold the lion’s share of investments, transferring some of these to your partner can make your financial positions more equal and create a more balanced portfolio for your household.

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The tax implications of transferring shares to your spouse

How does transferring shares to your spouse affect the tax you pay? Here are a few of the biggest considerations and benefits:

Capital Gains Tax (CGT)

One of the biggest advantages of transferring shares between spouses is that it’s treated as a “no gain, no loss” transaction for CGT purposes. This means:

• The transfer is deemed to occur at cost price (the price you originally paid for the shares).
• No CGT is triggered at the point of transfer.

However, it’s important to be aware that when your spouse eventually sells the shares, the gain will be calculated based on the original purchase price. 

Also, if you do divorce or separate within a year of the shares being transferred, CGT will still apply.

Inheritance Tax (IHT)

Another benefit of transferring shares to your spouse is the exemption from Inheritance Tax. This means that if you were to pass away, the shares received by your spouse wouldn’t be subject to IHT.

Just note that a potential IHT liability could arise if your spouse later transfers the shares to someone else. Also, if you pass away within seven years of transferring the share, then it may still be subject to IHT.

Dividend tax

If you’re transferring shares that pay dividends, dividend tax will still apply, and the dividends your spouse receives from those shares will be taxed at their Dividend Tax rate. 

The annual dividend allowance (£500 for 2024/25) applies individually to each partner, which can end up saving you money as a couple. For example, if you’re a higher rate taxpayer but your spouse pays basic rate tax, transferring shares to them means the dividends will only be taxed at the basic rate.

Stamp Duty

More good news: transferring shares to your spouse is exempt from Stamp Duty, provided you’re both living in the UK and legally married or in a civil partnership.

How to transfer shares to your spouse

The process of transferring shares to your spouse doesn’t have to be complicated, but it does require some planning:

1. Review your company documents

Before starting the transfer, carefully examine your company's Articles of Association and any shareholders' agreements, as they may contain specific rules or restrictions regarding share transfers.

2. Make sure you have the necessary approvals

Make sure you comply with your company's internal procedures and get any approvals needed from the board or other shareholders in your business.

3. Complete a Stock Transfer Form

For most share transfers, you’ll need to complete a Stock Transfer Form; a document which records the transfer of shares from one person to another.

What to include:

• Your details and your spouse’s details.
• The number and type of shares being transferred.
• The value of the shares (even though this may not result in any tax liability).

4. Consider using a CREST transfer form 

If you hold shares in certificate form, you may need to complete a CREST transfer form. This form is used to transfer shares electronically.

5. Update your company’s records on Companies house

Once the transfer is complete, ensure that your company's statutory books and shareholder register are updated to reflect the new shareholding structure. This includes updating the register of members and issuing a new share certificate to your spouse if necessary. 

6. Keep detailed records 

Keeping a record of any shares you’ve transferred is always a good idea, and will be especially important for calculating any future CGT liability if your spouse decides to sell the shares, or if HMRC ever raises questions about the transfer. Keep copies of:

• The Stock Transfer Form.
• Any correspondence related to the transfer.
• The original purchase details of the shares (to calculate CGT if sold later).

7. Consider getting professional advice 

Given the potential complexities involved, we always recommend seeking guidance from a tax advisor or professional accountant. Professionals like our friendly team at Crunch can ensure you comply with all legal requirements when transferring your shares, and help you optimise your tax position overall.

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Best practices for transferring shares to a spouse

Here are a few of our top tips for a transferring shares to your spouse smoothly:

Seek professional advice

As we just touched on, tax rules around transferring shares can get complicated, and even small mistakes can lead to penalties or missed opportunities. Always consult with a tax advisor or accountant to ensure you’re making the most of any available allowances and staying tax compliant.

Communicate with your spouse

While it might sound obvious, transferring shares is a financial decision that affects both partners. Discuss your goals and make sure you’re aligned on how your shares will be managed and used.

Review your portfolio regularly

Transferring shares shouldn’t be a one-and-done activity. It’s always a good idea to revisit your financial arrangements regularly to ensure they still make sense for your circumstances and goals.

The long-term view

Transferring shares to your spouse isn’t just a way to save on taxes in the short term - it can also be part of a larger financial strategy. By sharing ownership of assets, couples can better distribute wealth, improve financial resilience and plan more effectively for retirement or inheritance.

And if all this talk of tax and paperwork feels overwhelming, remember: professional help is just a phone call away. A good accountant or tax advisor can guide you through the process and help you make the most of your financial arrangements, so that you and your spouse can make informed decisions and build a secure financial future together. 

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