If you want to save capital gains tax (CGT) on property investments that you are unlikely to sell before the beginning of the new tax year, there are still tax planning opportunities to be had, says Tax Tips & Advice.
Take two properties jointly owned by a married couple, which were bought for £65,000 nearly 30 years ago and are now worth £320,000. Although the couple need the cash, they realise that a sale would “trigger a massive CGT bill”. To minimise the bill, you can split the sale “between the current and next tax years” so that the couple can use two lots of annual exemptions.
This can be done by “gifting a share in the properties into a trust by 5 April, which includes themselves as beneficiaries so they can still access the money”. There is no stamp duty, but “for CGT purposes the transfer counts as if it were sold at market value”.
The result is a capital gain against which the couple can use their annual exemptions. As the trust is treated as buying the property at market value, when it’s sold it will get its share of the proceeds. The trick is to judge what share to give the trust so it won’t face a CGT bill. See https://tax.indicator.co.uk.