Parties going through a divorce will need to consider any tax issues they may have as part of their financial settlement. Any tax payable should be considered when carrying out discussions around settlement. When a marriage comes to an end, it is usual that there is a property that will either be sold or transferred to one of the parties. Before consideration is given as to how such assets are to be dealt with, it is essential to consider whether any Capital Gains Tax (CGT) will arise, whether it be on the family home, a second property, or any other capital assets such as shares and investments.
When parties are married and continue to be in a relationship, if there is a transfer of assets between the parties, no CGT is payable. Since 6 April 2023, separating married couples continue to have a ‘no gain no loss’ approach to CGT liability (where no CGT is payable) for up to three years from the end of the tax year of separation. However, it is important to note that if the couple divorces before the end of the three-year period, that protection will have ended on the date the divorce is finalised, unless the asset transfer forms part of the formal divorce and incorporated into an agreement or Consent Order made ‘in contemplation; of divorce.
When going through a divorce, married couples should always pay close attention as to whether there may be a CGT liability on their proposed settlement. It is therefore important that any agreement reached in respect of matrimonial finances is placed into a formal court order and seek to legal advice as soon as possible during the divorce process.
At Ellisons, we have an experienced team of Family Lawyers who will be able to assist you in reaching a financial settlement, and sign post you to specialist tax advice if CGT may be an issue in your case.
Our specialist family lawyers can review your specific circumstances, and we recommend obtaining advice at the earliest opportunity. We offer a free exploratory call so that we can match your specific needs with the right person in our family team. For more information or to arrange an appointment with a member of our Family Team, please contact us on 01206 764477. The team can offer advice at one of our offices in Colchester, Chelmsford, Frinton-on-Sea, Ipswich or Bury St Edmunds, or by telephone or video appointment. We are also pleased to be able to support Blue Light members and offer a discount on our initial fixed fee meeting.
