When couples separate: Capital Gains Tax charges

Separation or divorce is never easy, and tax can be one of the last considerations however couples who are separating or divorcing should be aware of the upcoming changes for capital gains tax which could significantly help their position.

New tax rules

Couples whose marriage or civil partnership ends formally in divorce or dissolution get longer to make a fair and tax efficient distribution of assets between them under new rules planned for disposals that occur on or after 6 April 2023.

Current capital gains tax rules

At present, the capital gains tax (CGT) rules mean such couples can transfer certain chargeable assets between them without CGT on a ‘no gain, no loss’ basis within certain time limits. This window is only open until the end of the tax year of separation. After that, transfers are treated as normal disposals for CGT purposes.

What will change under the new tax proposals

Under the new proposals, couples will have up to three tax years from the year that they stop living together to make no gain or no loss transfers of assets, and unlimited time when the assets are the subject of a formal divorce agreement. There are also modifications to the private residence relief rules as they apply when a spouse or civil partner moves out of the former shared home. These aim to ensure that private residence relief operates more fairly, allowing relief for the period between moving out and sale to a third party.  

Get in touch

The tax rules are complex, and if this is an area of relevance to you, please do contact our tax experts, who will be happy to advise you further and discuss your specific circumstances in strict confidence.