I bought a house when single in May 1983 and with costs and improvements it totalled £27,000. I married in September 1987 and moved into my wife's house. In 1995, we moved back to my house and this became our main residence. The other house was sold and there was no capital gains tax (CGT) due (i.e. the gain was within the annual CGT exemption). In 2005, we moved to a new house which became our main residence. The house was bought in 1983 and remained empty from 2005 until sold in July 2019 for £190,000 (less fees of £3,000). Transfer of half the freehold was not made until May 2018 and the valuation for the whole property for transfer was £190,000. Whilst I will be able to claim partial private residence relief on my half of the gain £80,000, what will the CGT be due by my wife?

If you look at HMRC’s Capital Gains tax manual here (and CG64953 and CG64955), you can see that because you transferred to your wife at a time when you were not living in the property as your main residence, she takes over your original base cost (i.e. half of £27,000) but she does not take over your principal private residence (PPR) history. So, her half of the gain (i.e. £80,000) will not be eligible for any relief except the CGT annual exemption. With hindsight, you would have been better off not transferring to her, or rather only doing so at a time when it was your PPR. However, if it is any consolation, you should know that this is a fairly common scenario.