Previously, if you transferred assets after the tax year in which you separated from your spouse, you would potentially be subject to capital gains tax.
From today, transfer of assets between couples who are divorcing will be within the ‘no gain no loss’ rules even if they are in the year after separation, for up to three years from the year they cease to live together.
This means that there will be no immediate capital gains tax payable on the transfer. The new spouse will take over ownership of the asset at the original base cost and will be responsible for paying any future capital gains tax on a sale or transfer.
Divorcing couples who are subject to a formal divorce agreement, will have an unlimited time in which to transfer assets between them selves under the ‘no gain no loss’ rules.
Individuals will also now be able to qualify for Principal Private Residence Relief (PPR Relief) when the family home is sold. Even if they have already moved out and not been living there in the last 9 months.
These rules are intended to be fairer to separating couples by giving them additional time in which to distribute assets between themselves without CGT.
If you have any queries at all or would like some tax advice, please get in touch with our tax department.