Ami Jack, tax partner at Evelyn Partners, comments on today’s announcement by the government to give spouses and civil partners who are in the process of separating more time to resolve their tax affairs:
“Following previous Office of Tax Simplification recommendations, we now have confirmation that the ‘no gain no loss window’ on separation and divorce is being extended to up to three years after the year of separation. Separating spouses and civil partners will therefore have additional time before CGT applies to transfers. Assets transferred later under a formal divorce agreement will also be at “no gain no loss”. The Government also confirmed changes that will improve the CGT position of those who retain an interest in the former matrimonial home when it is occupied by their former partners.
“Currently, couples have only until the end of the tax year in which they separate to transfer assets without incurring a CGT charge. This has been particularly problematic for those who separate close to the end of the tax year, and creates artificial pressure to speed up the division of assets to avoid creating “dry tax charges”. This extension will, for many, reduce the CGT cost of getting divorced and give separating spouses or civil partners a bit more time to sort out their financial affairs in what can be very difficult circumstances.
“Separating out finances during a divorce can be extremely complex and generally take time to resolve. Once the decision to divorce has been made, both parties will want the process to be finalised as quickly as possible, but agreement often needs to be reached on a range of different areas so managing the tax affairs of separating spouses and civil partners can be complex. Knowing they are up against the clock to transfer assets between each other to avoid incurring a possible charges to CGT has historically added stress to the process for both parties. This sensible change allows more time for them to resolve their affairs.”
The new rules will apply to disposals made on or after 6 April 2023, if the legislation is passed as expected in Finance Bill 2022-23.
Evelyn Partners is the UK’s leading wealth management and professional services group, created following the merger of Tilney and Smith & Williamson in 2020. With £62.2 billion of assets under management (as at 30 June 2024), we are one of the largest UK wealth managers ranked by client assets and the seventh largest accountancy firm by ranked by Group fee income (source: Accountancy Age 50+50 rankings, 2023).
We have a network of offices in 30 towns and cities across the UK, the Republic of Ireland and the Channel Islands. Through our operating companies, we offer an extensive range of financial and professional services to individuals, family trusts, professional intermediaries, charities, and businesses.
Our purpose is to ‘place the power of good advice into more hands’, and we are uniquely well-placed to support clients with both their personal financial affairs and their business interests. Our personal wealth management services include financial planning, investment management, personal tax advice and, through Bestinvest, we have a multi award-winning online investment service for self-directed investors. For businesses, our wide range of services includes assurance and accounting, business tax advice, employee benefits, forensics, fund administration, fund governance, recovery and restructuring and transaction services.
For further information please visit: https://www.evelyn.com/
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