Gifting Shares — CGT Implications of Giving Shares Away

Giving shares away feels like a generous, non-commercial act. But HMRC sees it differently. Under UK tax law, a gift of shares is treated as a disposal at market value — meaning you may owe CGT even though you didn’t receive a penny.

There are exceptions, though, and they’re worth knowing about.

Gifts to your spouse or civil partner — tax-free

Under TCGA 1992 s.58, transfers between spouses who live together happen at “no gain, no loss”. Your spouse inherits your original cost basis. No CGT arises at the point of transfer.

This is the foundation of the “bed and spouse” strategy described in our tax planning guide. If your spouse is in a lower tax band or has unused CGT exemption, transferring assets before selling can save significant money.

Example: You bought shares for £10,000. They’re now worth £25,000. You transfer them to your spouse (no CGT). Your spouse sells for £25,000. Their gain is £15,000 (using your original cost basis), but they can use their own £3,000 exemption — potentially at the 18% rate if they’re a basic-rate taxpayer. If you’d sold yourself at the 24% rate, the difference on the taxable portion is material.

Important: the transfer must be genuine. Your spouse must actually own and control the shares. HMRC can challenge arrangements that are purely artificial — see their guidance at gov.uk/capital-gains-tax/gifts.

Gifts to children and other family

Giving shares to your child, parent, sibling, or anyone who isn’t your spouse/civil partner triggers CGT. You’re treated as having sold the shares at their market value on the date of the gift.

Example: You bought 500 shares at £4 each (cost £2,000). You gift them to your adult child when they’re worth £12 per share (market value £6,000). Your disposal proceeds for CGT purposes are £6,000. Your gain is £4,000. After the £3,000 exemption, you owe CGT on £1,000.

The recipient’s cost basis for future CGT purposes is the market value at the time of the gift (£6,000 in this example). When they eventually sell, their gain is calculated from that point.

In some limited circumstances, you can claim holdover relief under HMRC Helpsheet HS295 to defer the gain. This mainly applies to gifts of business assets or gifts into certain trusts — not to ordinary quoted shares.

Gifts to charity — fully exempt

Gifts of shares to registered UK charities are exempt from CGT. Under HMRC Helpsheet HS342, you may also be able to claim income tax relief on the market value of shares donated.

This creates a powerful tax planning opportunity. If you have shares with large unrealised gains and you want to support a charity, donating the shares directly (rather than selling, paying CGT, then donating cash) avoids the CGT entirely. The charity receives the full market value.

Many UK charities accept direct share donations — the ShareGift service facilitates this for smaller holdings.

Gifts triggered by death

When someone dies, there’s no CGT on death — the assets pass to the estate at market value. But inheritance tax may apply instead. The person who inherits the shares gets a new cost basis at the date-of-death market value. See our complete CGT guide for how the calculation works when inherited shares are eventually sold.

Practical considerations

Before gifting shares, calculate the CGT impact. Use TaxBull’s sell simulator — it shows the gain that would arise if you sold at current market value, which is the same gain that arises on a gift. This lets you see whether the gift is worth making now or whether it’s better to wait until a year when you have losses to offset.

Also consider whether the recipient needs to be reporting to HMRC — if you gift shares to your child and they sell, they may need to file a self-assessment for the first time.

Gifts of assets involve both CGT and potentially inheritance tax. This is general information only. Take professional advice before making significant gifts.