For many people, separation or divorce is something you would never imagine yourself having to navigate. However, it is a sad reality for many couples in the 21st century and with little to no tax and financial knowledge, it can be immensely stressful. This recent update to the rules for Capital Gains Tax could prove to be beneficial for many…
From April 2023, divorcing couples will no longer need to settle their estates within a year and face capital gains tax bills. Rather, separating spouces or civil partners will be given up to three years to make any no gain or no loss transfers of assets. This new measure affects the rules that apply to the transfer of assets between spouses and civil partners going through the separation process. There are also some new special rules, for those who’ve maintained a financial interest in their former family home (post-separation), which will apply when said property is sold.
Separating individuals will be given up to three years, after the year in which they stop living together, to make no gain or no loss transfers of assets, plus be granted unlimited time when the assets are the subject of a divorce agreement.
Vanessa Lee, tax partner at BDO, said, ‘The proposals, for disposals on or after 6 April 2023, bring in a much more favourable tax treatment.
‘This provides valuable time for spouses and civil partners in the process of separating to organise their financial affairs without unwelcome tax liabilities – a long overdue change to help families.’
To summarise, these new measures aim to make the process of separation or divorce easier for those who are distributing their assets between themselves and will formally apply to cases on or after 6 April 2023.
Do you need help with managing your assets? Get in touch today to learn more about our accounting and tax services.