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posted 2 years ago
The government has recently published draft legislation which, if formally adopted, would introduce significant changes to the rules that apply to transfers of assets between spouses and civil partners who are in the process of separating.
At present, where there are assets (typically a property or shares in a business) to distribute between separating spouses or civil partners, any transfers will only be free of capital gains tax (CGT) if they take place within the same tax year as the date of separation or if some other exemption applies. Often, this does not leave sufficient time to negotiate a fair and sensible division of the assets and to implement the terms of an agreement before the end of the tax year.
If the proposed changes are formally adopted it will give separating spouses or civil partners up to three years after the year they stopped living together to make a transfer of assets between themselves free of CGT and an unlimited amount of time if those assets are being divided in accordance with a formal court order.
These proposed changes in the rules could potentially save separating spouses or civil partners thousands of pounds in tax and are to be very much welcomed.
In most cases it is still prudent to get bespoke CGT advice from an accountant before proceeding with a settlement so that the tax implications can be fully considered and factored in to any agreement.
You can read the proposed changes in more detail here: Capital Gains Tax: separation and divorce – GOV.UK (www.gov.uk)
Dominic Lee
17.08.22
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