Tax exemptions are there to be used and one of the most valuable is the ability to transfer the ownership of assets between spouses who live together in the tax year, completely free of tax. Remember, registered “civil partners” are treated just like spouses for all tax exemptions.

You may want to transfer a buy-to-let property held in your sole name into your joint names before you sell it. Once in joint names the gain arising on the sale is split between you, so you can both set your annual capital gains exemption (£8,800 for 2006/07) against the appropriate share of the gain. The residue of the gain may also be taxed at a lower marginal rate in your spouse’s hands.

If you are planning to save tax in this way the transfer should be done well before the property is put on the market, and it should be completed with a legal deed, not just as a vague agreement between you.

Another good reason for transferring assets between you is to equalise your estates for inheritance tax purposes. Unfortunately you cannot know which of you will die first, so you should each aim to hold about equal amounts of your total joint wealth. Your wills should leave gifts up to the inheritance tax threshold (£285,000 for 2006/07) to the next generation or to other beneficiaries, and leave the balance tax free to your spouse. This ensures that no inheritance tax is paid on the first death. Ask us to help you with your inheritance tax planning.