Unmarried partners are separate, unconnected people for capital gains tax, so a gift or a cheap sale between them is treated as made at market value and can produce a taxable gain. The no gain no loss rule in section 58 TCGA 1992 covers only spouses and civil partners. On a jointly owned home each partner is taxed on their own share, and each partner can have their own main residence for private residence relief.

Why is a transfer between unmarried partners taxed at market value?

Section 17 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992) deems a disposal to be made for market value where it is not a bargain at arm’s length, and it names gifts specifically. HMRC’s guidance says to use market value where an asset is a gift, or where it is sold for less than it is worth to help the buyer. A transfer from one partner to the other is therefore taxed as if the giver had sold the asset at its full value on the day of the gift, even though no money changed hands.

Married couples and civil partners avoid this because section 58 treats a disposal between them as made for whatever figure gives neither a gain nor a loss, provided they are married or in a civil partnership and living together. The condition is the legal relationship. However long an unmarried couple have lived together, section 58 does not apply to them, and GOV.UK confirms that the normal rules apply to gifts to anyone other than a spouse, civil partner or charity.

A genuine sale at the full price agreed between the partners uses the actual price. The problem cases are gifts, transfers into joint names for nothing and sales at a friendly discount.

Are unmarried partners connected persons?

Not because of the relationship alone. Section 286(2) connects an individual with their spouse or civil partner, their relatives and the spouses or civil partners of relatives, and defines a relative as a brother, sister, ancestor or lineal descendant. An unmarried partner is not on that list. Partners can still be connected in other ways, for example as business partners under section 286(4) or through a company they control together; see connected persons for tax.

This has one useful consequence. Section 18(3) restricts a loss on a disposal to a connected person so that it can only be set against gains on later disposals to that same person. Because unmarried partners are not connected, a loss on a market value transfer to a partner is an ordinary allowable loss. The gift is still at market value, but under section 17 rather than section 18.

How is a jointly owned home taxed?

Each owner is taxed on their own share of the gain. Under the law of England and Wales, joint owners hold property either as joint tenants or as tenants in common (in Scotland, joint owners and owners in common). HMRC’s manual at CG70520 explains that joint tenants always have equal interests acquired at the same time, while tenants in common can hold unequal shares.

What counts is the beneficial ownership, not just whose name is on the title. If the home is registered to one partner but the other has contributed, the other may claim a share under a constructive trust. HMRC’s starting point at CG65421 is that beneficial ownership follows legal ownership, and it quotes Stack v Dowden [2007] UKHL 17 on the heavy burden facing anyone who says otherwise. A written declaration of trust at purchase avoids most of this argument later.

Can each partner have their own main residence?

Yes, and this is a real difference from married couples. Section 222(6) says that a married couple or civil partners living together can have only one residence or main residence between them, and GOV.UK repeats that married couples and civil partners can only count one property as their main home at any one time. The restriction is not applied to unmarried couples, so where each partner owns and lives in a home that is genuinely a residence for them, each can claim private residence relief on their own property, subject to the normal conditions.

Where someone has two residences, a nomination of the main one must be made in writing to HMRC within two years of each change in the combination of homes, and all owners of the nominated property must sign it. If the couple later marry, section 222(6) applies from then on and only one home can qualify for the couple.

What happens when one partner gives the other a share of their home?

Illustration only. Sam bought a house for £250,000 and has lived in it as an only home throughout. When it is worth £400,000, Sam transfers a half share to partner Alex for nothing.

Step Amount
Deemed proceeds for Sam (half of £400,000) £200,000
Cost of the half share (half of £250,000) £125,000
Gain before relief £75,000
Private residence relief (main home throughout) £75,000
Chargeable gain Nil

Alex’s base cost for the half share is £200,000. If Sam had let the house or lived elsewhere for part of the ownership, part of the £75,000 could be chargeable, and tax due on a gain from UK residential property must be reported and paid within 60 days; see the 60 day property return.

What about shares and other investments?

Each partner has their own annual exempt amount, which is £3,000 for 2026 to 2027, and their own rate band. From 6 April 2026 gains are taxed at 18% within the basic rate band and 24% above it; see capital gains tax rates. Spouses often move assets to the partner with unused allowance or a lower rate before a sale, as explained in spouse transfers for capital gains. For an unmarried couple that move is itself a market value disposal, so the giver is taxed on the gain to date. For jointly held shares, each partner works out the gain on the portion they own.

Gift hold over relief under section 165 for business assets does not depend on marriage and can sometimes defer the gain on a gift of qualifying shares or business property; see gift hold over relief.

What happens if an unmarried couple separates?

Married couples who separate keep no gain no loss treatment until the earlier of the last day of the third tax year after the year they stopped living together and the date of a court order ending the marriage, under section 58(1C). Unmarried couples have no such window. Any transfer of a share in the home or other assets on separation is at market value from the start.

For the home, private residence relief usually covers most of the gain for the partner who leaves. GOV.UK confirms that the last 9 months of ownership always qualify where the property was the owner’s only or main residence at some point. A long gap between moving out and transferring or selling the share can leave part of the gain taxable.

What happens if one joint owner dies?

For joint tenants, the deceased’s interest passes automatically to the survivor. CG70520 explains that section 62(10) brings that interest within section 62, so there is no disposal by the deceased and the survivor is treated as acquiring the inherited share at its probate value. Tenants in common pass their share under their will or intestacy, with the same probate value rule. Inheritance tax is a separate question with its own rules.

What mistakes come up most often?

  • Assuming that years of living together give the same treatment as marriage.
  • Moving shares or a buy to let share to a partner to use their allowance, which triggers a gain for the giver.
  • Leaving the beneficial shares in a home undocumented, so the split is disputed on sale or separation.
  • Forgetting the 60 day deadline when a share of a let property is transferred.
  • Not reviewing main residence nominations when partners with two homes marry.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.