Bed and Spouse: Double Your CGT Allowance (2026/27)

What Is "Bed and Spouse"?

Bed and Spouse is a tax planning technique where one partner sells shares to crystallise a capital gain (or loss), and the other partner buys the same shares back in their own name. Unlike the classic "Bed and Breakfast" trade - where selling and rebuying within 30 days is caught by HMRC's share matching rules - the Bed and Spouse route works because spouses are treated as entirely separate individuals for Capital Gains Tax.

The name sits alongside two related strategies: Bed and Breakfast (now blocked by the 30-day rule) and Bed and ISA (selling and rebuying inside an ISA wrapper). Bed and Spouse is the third option - and the only one that can double your annual exemption.

The Legal Basis: TCGA 1992 s58

Two rules make this work:

1. No gain/no loss transfers. Under Section 58 of the Taxation of Chargeable Gains Act 1992, any asset transferred between spouses or civil partners who are living together is treated as if it were disposed of for a consideration that produces "neither a gain nor a loss." In plain English: the transfer itself is invisible to HMRC. The receiving spouse inherits the original cost base as though they had bought the asset themselves at the original price.

2. Separate taxpayers. Despite filing jointly for some purposes, married couples and civil partners are separate individuals for CGT. Each gets their own £3,000 annual exempt amount, their own basic-rate band, and their own set of capital losses.

How It Works: Step by Step

Suppose you hold shares worth £25,000 that you originally bought for £10,000. Your unrealised gain is £15,000. You want to crystallise some of that gain to use your annual exemption before 5 April 2027.

1. Transfer shares to your spouse. You gift some or all of the shares to your partner. Under s58, this is a no gain/no loss event - no CGT is due, and your spouse's cost base becomes your original £10,000.
2. Your spouse sells the shares. They dispose of the shares on the open market. The gain is calculated using your original cost base, so the gain is £15,000.
3. Your spouse uses their own exemption. The first £3,000 is covered by their annual exempt amount. The remaining £12,000 is taxable at their marginal CGT rate.
4. You can also sell shares in your own name to use your own £3,000 exemption - giving you a combined £6,000 tax-free as a couple.

Your spouse can then rebuy the shares in their own name if they want to maintain the market position. There is no 30-day restriction because HMRC's share matching rules only match sales and purchases by the same person.

The Tax Maths: Why It Saves Money

Bed and Spouse offers two distinct advantages over selling in your own name alone.

Double the exemption. Each spouse has a £3,000 annual exempt amount. Without planning, only one spouse's exemption applies. By splitting disposals, a couple can shelter £6,000 of gains per year rather than £3,000 - sheltering the extra £3,000 saves up to £720 in CGT at the 24% higher rate (24% of £3,000).

Tax band arbitrage. If one spouse is a basic-rate taxpayer and the other is a higher-rate taxpayer, transferring the asset to the basic-rate spouse before selling means the gain is taxed at 18% rather than 24%. On a £12,000 taxable gain (after the exemption), that difference is £720 in tax saved.

Combined, these two levers can save a higher-rate taxpayer around £1,440 on a single disposal - the £720 from the second exemption plus the £720 band-arbitrage saving in the examples above.

Bed and Spouse vs Bed and ISA

Both strategies dodge the 30-day rule, but they work differently:

• Bed and ISA shelters the shares from all future CGT inside the ISA wrapper but is capped at £20,000 per year (the ISA subscription limit). You do not need a spouse.
• Bed and Spouse has no cap - you can transfer any amount. It doubles your annual exemption and can shift gains into a lower tax band. But the shares remain in a taxable account, so future gains are not sheltered.

The two strategies are not mutually exclusive. You can do both: transfer shares to your spouse, who sells them and rebuys inside their own ISA (a "Bed, Spouse, and ISA" combo). This uses your spouse's exemption and shelters the repurchased shares.

Important Conditions and Pitfalls

• You must be married or in a civil partnership. Cohabiting partners who are not married or in a civil partnership do not qualify for the s58 no gain/no loss treatment. A transfer to an unmarried partner is a disposal at market value.
• You must be living together. S58 applies to spouses "living together" in the tax year of the transfer. Separated couples lose this treatment after the end of the tax year in which they separate (or up to three years in some cases following the 2023 reforms).
• The transfer must be genuine. Your spouse must actually own and control the shares after the transfer. A sham arrangement where you retain beneficial ownership could be challenged by HMRC.
• Cost base carries over. Your spouse inherits your original acquisition cost. If they sell immediately, the gain is the same as it would have been in your hands. The benefit comes from using their exemption and tax band, not from eliminating the gain.
• Stamp Duty on repurchase. If your spouse rebuys UK-listed shares, Stamp Duty Reserve Tax (SDRT) of 0.5% applies to the purchase - rebuying a £25,000 holding costs £125 (0.5% of £25,000). This does not apply to most ETFs domiciled outside the UK.

Tax Year End: Act Before 5 April 2027

The £3,000 annual exempt amount is "use it or lose it" - it cannot be carried forward. If neither you nor your spouse has used your exemption for 2026/27, you have until 5 April 2027 to crystallise up to £6,000 in gains between you, tax-free. Bed and Spouse is one of the simplest ways to do this, especially if you hold appreciated shares outside of an ISA.

Consider combining this with a Bed and ISA if either of you has unused ISA allowance - sell, use the exemption, and rebuy inside the ISA for permanent tax shelter.