Gifting shares to spouse

Question:

I have stock options under my name that I need to exercise before 31st March as otherwise will lapse. I need to sell a number of them as well. They will generate a capital gain.

Can I gift shares immediately after exercising to my wife and then sell some of the ones under my name as well as under her name to in effect split the capital gain and benefit from both our CGT allowances? Does she need to hold the shares for any time? How is her capital gain calculated (I imagine based on the exercise price and not the market price). What needs to be done legally to gift the shares?

Thanks and regards

Answer:

Yes you can do this. If the options were from an employer you'd need to assess whether they were approved or unapproved options.

If they were unapproved on the exercise you'd be subject to income tax on value of the shares received (less amount paid). Your CGT base cost would be the market value. You'd therefore only be subject to CGT on a future disposal on any uplift in the value. If there was expected to be a significant uplift in value you could transfer shares to your wife. Her acquisition cost would be your acquisition cost (ie the market value at the date of exercise).

The transfer to your wife would need to be a transfer of the legal title or a transfer of the beneficial interest. Ideally you'd change the legal title to the shares ot your wife. Any future gain on disposal would then be split.

If the shares were in an HMRC approved share scheme there is no tax charge on exercise and there is a charge to CGT on the entire option gain on disposal. By transferring the shares to a spouse prior to the disposal there could be a loss of the special tax relief on disposal. You would though need to review the specific rules for the approved scheme in question.