Previously when couples separated, they had until the end of the tax year to transfer assets between them, in order to benefit from spousal exemption for capital gains tax purposes.

This could and did put significant pressure on both parties to potentially make quick decisions if the separation occurred towards the end of the tax year. 

The Office of Tax Simplification reviewed the position and proposed that the spousal exemption should be extended.

In the Finance Bill (no.2) 2023 the period of grace for the transfer of assets has been increased to 3 years from 6 April 2023.

This gives a significant period of exemption to separating parties for capital gains tax purposes and allows more time for decisions to be made. 

If the transfer occurs outside of this timeline, then the relief can be extended if the transfer of assets is in accordance with a formal divorce agreement.

In addition, there has been an extension to claiming principal private residence relief on a third party sale of the former home, which previously was restricted to the period of residence.  Careful thought is needed in relation to making a claim on sale, as it would impact the period of residence in another property.

If you would like a review undertaken of your position on divorce, then please contact our Senior Tax Manager Lucy Orrow

The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

Lambert Chapman Chartered Accountants

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