Nothing to do with PAYE, capital gains is a different tax head.
Everyone has an annual allowance of 1,270. Basically it means you don't have to be submitting annual return for immaterial amounts.
But say you have a 10k loss carried forward and you make a 5k gain this year. You have to use the loss first, so you've extinguished 5k of the loss, rather than 3,730 if you had used the personal exemption first.
There's a specific clause in the tax act for sharing losses between spouses (section 1028):
"If in a year of assessment one spouse has allowable losses which he/she cannot utilise because of an insufficiency of chargeable gains (from which those allowable losses would be deductible under section 31), the balance of the losses after being set off against that spouse’s gains (if any) can be offset against the other spouse’s gains in the year of assessment. This treatment does not operate for a year of assessment where either spouse makes an application, that this subsection (subsection 3) does not apply, on or before 1 April of the following year. "