Couples in the process of separating may find themselves facing a costly capital gains tax (CGT) bill if they miss the tight deadline for transferring assets as part of their divorce settlement. From 6 April 2023, separating couples will be given considerably more time.
Currently, the basic rule is that:
Under the new proposals, separating couples will be given up to three years after the end of the tax year when they cease to live together in which to make no gain or no loss transfers. However, earlier divorce, dissolution of a civil partnership or separation under a separation order will bring the no gain, no loss period to an end.
There will be no time limit for any assets transferred as part of a formal divorce agreement.
The changes will apply to disposals made on or after 6 April 2023, so couples separating during 2022/23 can also benefit.
Private residence relief
Additionally, some special rules will apply to individuals who maintain a financial interest in their former family home following separation:
The government’s policy paper explaining the change can be found here.