New Capital Gains tax rules in family cases
16 March 2023
It is anticipated that from 6 April 2023, the capital gains tax rules applicable to divorcing couples, will change radically.
Separating couples will have 3 years following the tax year of their separation, in which they can make transfers on a no gain/no loss basis. At present they have to be completed in the same tax year. Furthermore, if the transfer is done by way of a consent order or order of the court, there is an unlimited period of time for the no gain/no loss transfers.
Where one spouse does not receive their interest in the property for a period of time, for example when children are 18, they will not be penalised by postponing the sale for the benefit of the family.
Whilst the new rules make the position simpler at the time of the settlement, the person who transfers the asset is taking on a latent tax charge. The gain has not been wiped out completely but is postponed and as the acquisition cost is considered, the eventual tax liability may be greater that under the current rules.
It is important to note that there will be no changes for co-habiting couples.
Tax is an important consideration in matrimonial settlements, particularly where there is more than one property. Expert advice should always be taken prior to finalising the terms of a financial settlement.
Please contact the Family team for advice in relation to this issue or any other family matter, on 01302 341414 or 0114 272 1884, alternatively, you can fill out our online enquiry form.
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