When couples separate: capital gains tax change

Couples whose marriage or civil partnership ends formally in divorce or dissolution get longer to make a fair and tax efficient distribution of assets between them under new rules planned for disposals that occur on or after 6 April 2023.

At present, the capital gains tax (CGT) rules mean such couples can transfer certain chargeable assets between them without CGT on a ‘no gain, no loss’ basis within certain time limits. This window is only open until the end of the tax year of separation. After that, transfers are treated as normal disposals for CGT purposes.

Under the new proposals, couples will have up to three tax years from the year that they stop living together to make no gain or no loss transfers of assets, and unlimited time when the assets are the subject of a formal divorce agreement. There are also modifications to the private residence relief rules as they apply when a spouse or civil partner moves out of the former shared home. These aim to ensure that private residence relief operates more fairly, allowing relief for the period between moving out and sale to a third party.  If this is an area of relevance to you, please do contact us.