Capital Gains Tax rules changed to give divorcing couples more time to transfer assets

From 6th April 2023, spouses and civil partners will be given up to three years in which to make what are known as ‘no gain or no loss’ transfers of assets between themselves when they cease to live together. It is also proposed that they are given unlimited time if the assets are part of a formal divorce agreement.

It also introduces rules that apply to individuals who have maintained a financial interest in their former family home following separation and that apply when that home is eventually sold.

The CGT rules currently state that transfers of assets between spouses and civil partners who are living together are made on a “no gain or no loss” basis in any tax year in which they live together. Effectively, any gains or losses from transfers are deferred until the asset is disposed of by the receiving spouse or civil partner. The spouse or civil partner is treated as having acquired the asset at the same original cost as the transferor.

On separation, this special no gain or no loss treatment is only available to the end of the tax year of separation. After the tax year end, transfers are treated as normal disposals for CGT purposes.

The changes come on the back of recommendations by the Office of Tax Simplification (OTS) which said “the government should extend the ‘no gain no loss’ window on separation to the later of:

What are the changes to Capital Gains Tax rules for separating couples?

The main proposed changes are as follows:

The changes will make the CGT rules fairer and gives spouses and civil partners more time to transfer assets between themselves without incurring tax charges.

How we can help

TaxAssist Accountants offer a comprehensive range of services in relation to Capital Gains Tax planning. Call us today on 01273 901919 or fill out our online enquiry form to arrange a free initial consultation.

Last updated: 21st July 2022