{"id":22072,"date":"2022-07-12T09:28:18","date_gmt":"2022-07-12T09:28:18","guid":{"rendered":"https:\/\/smh.group\/?p=22072"},"modified":"2022-07-12T09:28:18","modified_gmt":"2022-07-12T09:28:18","slug":"tax-implications-of-no-fault-divorce","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/tax-implications-of-no-fault-divorce\/","title":{"rendered":"What are the tax implications of no fault divorce?"},"content":{"rendered":"

<\/a>In April 2022, ‘no fault divorce’ became a reality. Although there are no associated changes to the tax rules, divorcing couples should now be in a better position to focus on financial issues \u2013 particularly important if you are not using a lawyer or solicitor.<\/strong><\/p>\n

<\/a>Capital gains tax<\/strong><\/h2>\n

For most couples, the main tax issue will be the capital gains tax (CGT) consequences of transferring assets as part of the divorce settlement.<\/p>\n

The basic rule is that transfers only escape CGT (on a \u2018no gain, no loss\u2019 basis) if made by the end of the tax year in which the couple are no longer living together \u2013 the year of separation.<\/p>\n

After the end of the year of separation, but before the divorce is finalised, any transfers of assets will be treated as made at market value, so CGT can be payable \u2013 but with no proceeds to fund the tax liability.<\/p>\n

Couples dissolving a civil partnership can now also do so on the same no fault basis.<\/p>\n

Private residence relief will generally mean there are no \u2013 or few \u2013 CGT implications if transferring the family home, but someone with a portfolio of property and investments could face a large, unnecessary, CGT bill without careful planning.<\/p>\n

Timing<\/strong><\/h2>\n

With a no fault divorce, the applicant is required to wait 20 weeks from the start of the divorce proceedings until a Conditional Order (previously the Decree Nisi) is made. This is the time for reaching a financial agreement on how assets are to be divided. There is then a further wait of six weeks until the Final Order (previously the Decree Absolute) can be made.<\/p>\n

This is a minimum of six months. Add on possible paperwork processing delays, and a separation in the second half of the tax year means a straightforward transfer of assets will not be possible until the next tax year, making CGT an issue.<\/p>\n

If you are unsure of your tax position don\u2019t hesitate to get in touch with our team of <\/span>Accounting & Business Advisory<\/span><\/span><\/strong><\/a>\u00a0on\u00a0<\/span>0114 266 4432<\/span><\/strong>\u00a0or\u00a0<\/span>info@smhca.co.uk<\/span><\/span><\/strong><\/a>.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

In April 2022, ‘no fault divorce’ became a reality. 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