Changes to Capital Gains Tax as we know it


Changes to Capital Gains Tax as we know it

Our solicitors at Bookers & Bolton understand that divorce and separation can be overly complicated and may seem daunting at first. There are many decisions for you and your ex-partner to make when divorcing, on top of pressures to transfer their assets quickly and efficiently to avoid paying Capital Gains Tax. With the Government announcing changes to Capital Gains Tax in divorce and separation, due to come into fruition in April 2023, we are taking the opportunity to discuss the proposed policy and what the changes will mean for divorcing and separating couples.

What is Capital Gains Tax, and how does it work?

Capital Gains Tax refers to the tax paid on the profit you make from disposing of an asset that has increased in value. Disposing of an asset can mean selling it, giving it away as a gift, transferring it to someone, swapping it for another asset or getting compensation for it if it has been lost or destroyed.

When it comes to separating or divorcing couples, Capital Gains Tax deals with the transfer of assets between individuals after their separation or divorce. Assets may include shares, personal possessions, and/or property. In the best-case scenario, couples would deal with the transfer of assets before the separation takes place, making any transfer on a “no gains, no loss” basis. In this case, any gains or losses from the transfer are dealt with when the receiving partner disposes of the asset.

Current Capital Gains Tax Law

Under the current law, spouses and civil partners can only apply the “no gain, no loss” rule for the remainder of the tax year in which the separation or divorce occurs. Following this, all transfers are taxed the same way as normal disposals for Capital Gains Tax purposes.

To find out Capital Gains Tax is calculated, head over to the Government’s resource page.

Proposed changes and what they mean for you

The Government has announced changes in the tax charges that apply to asset transfers, ultimately making the transfers of assets between ex-partners fairer.

From April 2023, separating couples will no longer feel pressured to settle assets within the tax year of their separation in fear of paying Capital Gains Tax.

When the proposed changes are in place from April 2023, ex-partners will be given up to three years after they agree on their separation/divorce to make their “no gain, no loss” transfers. This will also apply to assets transferred as part of their formal divorce agreements, no matter the date they are disposed of.

The changes also state that the spouse or civil partner who retains the interest in the formal matrimonial home can claim Private Residence Relief (PRR) when the property is sold. In addition, those who have transferred their interests in the matrimonial home to their ex-partner are entitled to receive a percentage of the gains when the property is disposed of, meaning the same tax rule applies as when they transferred their original interest.

Divorce Solicitors Alton, Hampshire

Our specialist solicitors at Bookers & Bolton have extensive experience and offer a comprehensive range of services when it comes to divorce and separation procedures. Our family solicitors will keep you informed and prepared for every stage of your separation, helping you navigate this complicated and overwhelming process.

Speak to one of our solicitors by calling 01420 558 334 or emailing