Capital Gains Tax has often been an unforeseen consequence spouses or civil partners have to deal with when dividing their finances when separating and divorcing. The following changes have come into effect as of 6 April 2023, outlined in last month’s Budget from the Government.
- Separating spouses or civil partners will be given up to three years after the year they cease to live together in which to make no gain/no loss transfers.
- No gain/no loss treatment will also apply to assets that separating spouses or civil partners transfer between themselves as part of a formal divorce agreement.
- A spouse or civil partner who retains an interest in the former matrimonial home be given an option to claim private residence relief (PRR) when it is sold.
- Individuals who have transferred their interest in the former matrimonial home to their ex-spouse or civil partner and are entitled to receive a percentage of the proceeds when that home is eventually sold, be able to apply the same tax treatment to those proceeds when received that applied when they transferred their original interest in the home to their ex-spouse or civil partner.
It has always been the case that a financial clean break order is important in order to ensure that financial claims which couples have arising out of their marriage or civil partnership are brought to an end on their divorce. Now there are also important tax reasons why a formal divorce agreement is an important consideration.
If you know anyone would like advice, please contact our Family Team by calling 01206 700113 or contact us