A report published by the Office of Tax Simplification (OTS) has recommended extending the deadline by which divorcing couples are able to claim spousal exemption on Capital Gains Tax when dividing their assets.
Married couples or civil partners can transfer assets between them without triggering an immediate Capital Gains Tax charge. Divorcing or separating couples continue to benefit from this rule in the tax year in which they separate. However, after that, transfers take place at market value in accordance with the normal Capital Gains Tax rules.
In 2020 it took an average of a year to secure a divorce in England and Wales. The report found that many people consider that limiting the tax rule about these transfers to the tax year of separation gives couples inadequate time to reorder their affairs.
The OTS recommends that the government extend the operation of this rule to the later of:
- the end of the tax year at least two years after the separation event, and
- any reasonable time set for the transfer of assets in accordance with a financial agreement approved by a court or equivalent processes in Scotland
More from our tax experts
You can find all of our latest tax articles and tax resources here.
If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.
Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.
Free initial consultation
Tax Director, Sheffield
0114 266 7141
More similar content
The Chancellor Rishi Sunak has confirmed that he will be delivering his autumn budget on 27 October 2021. This is the first time there has been an autumn budget since 2018. In this budget, he will be announcing his plans to support public services and revive the...
HMRC has published a policy paper outlining the forthcoming changes to the penalties for late payment and interest harmonisation for taxpayers. The government intends to reform sanctions for late submission and late payments to make them 'fairer and more consistent...
The government has published draft legislation outlining how they aim to change the current rules for taxing partners in cases where the partnership’s year-end does not fall on 31 March or 5 April. What changes are being proposed? Partners will be taxed on the...