If I gift shares to my wife can she sell them and buy them back within an ISA?

If I gift shares to my wife can she sell them and buy them back within an ISA? If so how do I do this?

Hi Tom,

Thanks for your question.

In theory, yes, however, there are some key planning points to keep in mind.

You are able to gift between spouses without any tax implications. However, if your wife were to sell the shares there would need to be a capital gains tax assessment, which would look at the difference between the current value and the base cost of the shares when they were initially purchased. If there is a capital gain, your wife has a capital gains allowance of £12,300 up to which arising gains in the 2022/23 tax year will be tax-free. However, you will need to be sure this hasn't been used elsewhere. If there is a capital gains tax charge this will need to be declared on her self assessment tax return, and will be paid at a rate of 10% or 20% depending on her wider income position.

Your wife could then make a contribution into a Stocks and Shares ISA of up to £20,000 if she has not already used her allowance for the 2022/23 tax year. With this contribution, she could then buy back the shares. However, it is important to consider whether the shares are appropriate for her, given her attitude to investment risk, capacity for loss and wider objectives for the funds. Investing in direct equities is high risk and can limit the diversification of your investments.

There is quite a bit to consider here so I would suggest you speak to a financial adviser to understand your options and some of the risks involved in more detail.

I hope this helps.

Allie