Beneficial Ownership of an Asset

If you own an asset personally, with your spouse not being involved, that would normally mean that the capital gain on a sale will be taxed on you alone. The key aspect is who is the beneficial owner, rather than whose name is shown on the deeds or certificate of ownership. Often that will be the same person, but following a recent tax case there is scope for showing that perhaps each spouse is the beneficial owner with the result that ½ of the gain is taxed on each of them.

That can reduce the overall capital gains tax payable, especially if husband and wife can each use their own annual CGT exemption of £10,600.

The taxpayer in that case (the wife) successfully argued that although the mortgage on the property was in her name only, nevertheless her husband shared the mortgage payments with her. It was also held that the evidence clearly showed that the property had been bought in part from joint savings and also from the proceeds of an endowment policy held in the husband’s name. It was therefore accepted that both husband and wife were beneficial owners of the property and the gain was taxed 50:50 between them even though the title deeds only showed the wife as the legal owner.

This decision, subject to any successful appeal, provides plenty of flexibility in tax planning and we will be pleased to provide full details.