Easing of tax rules for divorcing couples confirmed

Jul 12, 2023
Author: Hawsons
easing of divorce tax rules

New legislation easing the tax rules for divorcing couples has received Royal Assent.  This confirms announcements made by the Chancellor in the Spring Budget 2023.  The changes apply in relation to disposals of assets made on or after 6 April 2023.


What were the previous tax rules regarding divorce?

Married couples and civil partners can transfer assets such as property, shares or business interests between them without incurring capital gains tax (on a ‘no gain, no loss’ basis).  However, under the previous rules, when a couple separated they could typically only benefit from this treatment until the end of the tax year in which the separation occurs.  For example, a couple that divorced in March 2022 could only transfer assets without incurring tax up to 5 April 2022.  If a transfer was made after the tax year of separation, this could result in unwelcome capital gains tax charges.


What are the capital gains tax changes?

The changes announced allow divorcing couples longer to arrange their affairs.  From 6 April 2023, couples have up to three years after the year they cease to live together to transfer assets on a no gain, no loss basis.  If the transfer is made as part of a formal divorce agreement, the couple have potentially an unlimited period to benefit from this treatment.

The changes will also benefit a spouse or civil partner who has moved out of the property before it is sold, or transferred to the remaining spouse.  The spouse who retains an interest in the former matrimonial home will be given an option to claim Private Residence Relief when it is sold.

Individuals who have transferred their interest in the former matrimonial home to their ex-spouse or civil partner and are entitled to receive a percentage of the proceeds when the home is eventually sold will be able to apply the same tax treatment to those proceeds when received that applied when they transferred their original interest in the house to their ex-spouse or civil partner.


Will these change benefit couples who have not been married or entered a civil partnership?

These changes will only help couples divorcing following the breakdown of a marriage or civil partnership.  Couples who have not been married or entered a civil partnership do not have access to the no gain no loss treatment.

Craig Walker, Tax Director at Hawsons, commented “The proposed changes are welcome and sensible. They will provide many divorcing couples with an extended time period to transfer assets such as their home without triggering tax. It can take time to agree a split of assets and this relaxation will reduce the time pressure for couples”

Contact us

Divorce is a complex process that requires careful consideration of various financial aspects, including capital gains tax implications. Tax laws and regulations can change on a regular basis. Therefore, we would always recommend consulting a tax professional who can provide tailored advice based on individual circumstances and the current rules regarding divorce.

At Hawsons we have a dedicated team of tax experts at our offices in Sheffield, Doncaster and Northampton.

If you would like advice on the tax implications of separation or divorce please do not hesitate to contact us.

We offer a free initial meeting to discuss your particular circumstances – contact us to arrange your free initial consultation.

Craig Walker

Tax Director, Sheffield


Free initial meeting

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