Major tax changes for divorcing couples
On the 22 July 2022 the government released draft legislation which will change the capital gains tax position for divorcing couples. If implemented it will take effect from 6 April 2023.
Currently, when married couples divide their assets there is only a short window of time in which they must separate or transfer assets between themselves to avoid a capital gains tax liability.
The draft legislation provides for this time limit to be extended to the whole period of time taken to transfer the assets as long as the couples are transferring assets pursuant to a court order.
These are welcome changes, which will enable many couples who are going through the divorce process to transfer their assets between each other without incurring an immediate capital gains tax liability, which often comes at a time when neither party wants to suffer the cost of additional liabilities.
This change in the law is also a stark reminder to clients and their legal advisers to make sure they get independent financial advice as well as legal advice when going through the divorce process.
If you are contemplating a divorce and need legal advice please get in touch to arrange your free initial consultation or call us on 0800 2800 421.