New Forest

15/06/2022

Capital Gains Tax on Separation and Divorce

When a married couple or civil partners separate, tax planning is understandably not at the top of the list of their thoughts. However, a ‘no gain/no loss’ rule allows capital assets to be transferred between them free of capital gains tax (CGT) up to the end of the tax year in which they permanently separate. Beyond that date, asset transfers between the couple will often give rise to a CGT liability. With many divorce settlements taking several months this is worth careful consideration.

The Office of Tax Simplification has recommended to the Treasury that the no gain/no loss rule should be extended to two years from the date of permanent separation. The government have accepted this recommendation, but the change in rules is yet to be legislated.

The actual date that assets are treated as transferred between the separating couple depends upon how the marriage or civil partnership is dissolved.

It is also important to consider private residence relief (PRR) on the family home. It should be noted that where one spouse or civil partner leaves the matrimonial home, they may continue to be eligible for PRR even if they no longer live in the property. There are specific conditions that need to be satisfied for this to apply.

All in all, CGT on separation is a complex area and please do talk to us if any issues may be in point. We understand the sensitivity of the situation and are here to help.

For further information on company loss relief, please contact Martin Back on 023 8046 1232.

Latest Tweets

The UK government have launched a new website to help you find the support available to you to help with the cost of living.

Click the link to read more 👉 https://bit.ly/3bmUVA6

The Recovery Loan Scheme is soon coming to an end - the scheme supports access to finance for UK businesses as they grow and recover from the disruption of the COVID-19 pandemic.

Click the link to read more 👉 https://bit.ly/3bA5Whx

Let’s Talk

Why not arrange a FREE consultation and find out what we can do for your business.