There's probably an obvious answer - but this has never occurred to me before today - transfers between connected persons for CGT are treated as sales at full market value. Transfers between husband and wife or civil partners are exempt. So why are spouses/civil partners included in the list of connected persons for CGT purposes?
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Inter spouse transfers are not necessarily exempt. They are only exempt if the spouses have not separated. Their inclusion on the list of connected persons is necessary to cover the position that applies between separated couples after the end of the tax year in which they separate until the decree nisi.
EDIT
I meant the decree absolute, not the decree nisi. Apologies
May I ask a follow-up question?
A married couple are treated as sharing the income from a jointly owned property 50:50 (subject to actual beneficial ownership being different and Form 17 filed), regardless of who actually receives the rent.
Does this rule cease to apply on separation or not until the decree nisi (or should it be decree absolute)?
Yes it should be decree absolute, not decree nisi (see my correction above). Yes it is my understanding that the tax privileges of marriage, including the one you mention, cease at the end of the tax year in which they separate.
not exempt
I don't think transfers between husband and wife are exempt - I thought that the value transferred is deemed to be that value which would give rise to no gain or loss - this distinction can be crucial in potential ppr situations