What Do The New CGT Rules Mean For Divorcing Couples?
Under the previous Capital Gains Tax (CGT) laws, separating couples transferring their assets had to do so within the tax year of separation to ensure no CGT was payable. After this period, any transfers were taxable for CGT purposes. For instance, if a couple were to divorce in December, they would have until April 5th to pay.
It was announced by the Chancellor in the March budget that this period of “no gain, no loss” transfers would be extended to three tax years.
This affords spouses and civil partners who are separating and don’t live together more time to transfer assets between themselves as part of a divorce settlement.
Two further reliefs have also been introduced:
- The option for an ex-spouse to claim Private Residence Relief (PRR) on the sale or transfer of the family home, even if this is more than nine months after they leave (previously the ex-spouse or civil partner could only claim PRR on the sale within nine months of moving out).
- If one ex-spouse has transferred their interest in the home to their former partner, but remains entitled to receive a percentage of the proceeds when that home is sold, they will be able to apply the same tax treatment to those proceeds that applied when they transferred their interest to their former spouse.
We very much welcome these changes, removing the arbitrary time-limit of the end of the tax year of separation, and thus affording divorcing couples more time to work out their options and coalesce around a financial settlement which works for them both and their family as a whole.
Author Name: Editor
Published content by The Divorce Surgery Editorial Team.
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