Capital Gain Tax (CGT) is the tax payable on any profit made upon disposal/transfer of an asset. This has always been a consideration for practitioners when couples are separating or divorcing as in many cases the family home needs to be sold or transferred from the parties joint names to one parties sole name.
The previous Capital Gains Tax rules provided that separating couples had until the end of the tax year in which they separated to transfer assets between them on a no gain / no loss basis. Given the uncertainty of the arrangements for separating and most importantly how the couple would be dividing the finances of a divorce if the separation occurred nearer to the end of the tax year couple often felt pressured into make hasty decisions to avoid unnecessary tax.
The new CGT rules introduced since 6 April 2023 have been welcomed. The new rules are as follows:
Overall, the new CGT rules are much fairer and will help separating couples. Simply put, the tax bill will be less. The only downside potentially is that the short time period previously allowed, whilst applying potentially unnecessary pressure, did mean parties remained focused on financial settlement.
The above is meant to be only advice and is correct as of the time of posting. This article was written by Kiren Dhillon, Senior Associate at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of April 2023.