The Government has implemented changes to the Capital Gains Tax (CGT) rules that apply to separating spouses.
The new rules will allow more time for the transfer of assets between them without incurring a potential tax charge, a change welcomed by Family Law practitioners.
Family Law Partner at Goughs Solicitors, Ross Phillips, said, “Previously there was often a rush to sell or transfer the family home or rental properties once a couple separated in order to take advantage of the tax rules that apply to married couples. Since the recent changes they are now allowed much more time to do so. A transfer of property between spouses before they obtain their final order of divorce, or within the first three tax years following their separation, will not trigger a potential Capital Gains Tax liability.
“Furthermore, and significantly, any transfers of property between spouses as a result of a court order, either reached by consent or made by a Judge within financial remedy proceedings, will not trigger a disposal for Capital Gains Tax purposes at any time in the future.
“Similarly, a spouse who holds an interest in the former matrimonial home will have the option to claim private residence relief (PRR) making it exempt from CGT when it is sold in the future provided they are not claiming PRR over a new main residence.
“However, caution must always be exercised when considering property owned by spouses abroad. The tax authorities overseas may not have a similar exemption for transfers of property between spouses in relation to property in foreign jurisdictions.”