The Lemon Fool

Hello,
Sadly my spouse is unexpectedly leaving me and we are about to start mediation to split up the financial assets. I am aware that shares can generally be transferred between spouses during marriage but I don't know how that applies to VCTs specifically around the 5 year rule. The shares are fairly new, in my name and I received the tax relief although our cash will also be split. Would I be able to transfer half to my spouse without penalty within the 5 years and would I (or they?) then be liable if they sold them within the 5 years? Would it be better to just give my spouse enough cash for their current market value and keep the VCT shares? But then I would end up with the expensive illiquid investment..
Thanks in advance,
VctLemon

Sorry to hear your sad news.
This page gives guidance from HMRC manual, but not sure it gives complete guidance for your situation.
https://www.gov.uk/hmrc-internal-manual ... l/vcm51090
Relevant section is:-

Disposals within marriage or a civil partnership

A disposal between spouses or civil partners who are living together does not give a rise to a withdrawal of ’front-end’ income tax relief. The spouse or civil partner receiving the shares is treated as having subscribed for them at the time they were originally subscribed for by the other spouse or civil partner, and as having received the ‘front-end’ income tax relief received by the other spouse or civil partner.

Any subsequent disposal, other than within marriage or a civil partnership, which gives rise to a withdrawal of ‘front-end’ income tax relief, is assessable on the spouse or civil partner disposing of the shares.

Probably needs a letter to HMRC to clarify your particular situation.