Currently, to transfer assets such as property or business interests at ‘no gain/no loss’, married couples/civil partners who live together must transfer those assets within the tax year of their separation. However, if the couple transfers or sells their assets outside of the ‘no gain/no loss’ period they are liable to pay Capital Gains Tax (CGT) in the usual way.
From 6 April 2023 there will be changes in the rules regarding CGT. These include:
- Spouses will be given up to three years after separation to make transfers on a ‘no gain/no loss’ basis;
- No gain/no loss applies to the transfer of assets as part of a formal court order.
- A spouse who holds interest in the former matrimonial home can choose to claim Private Residence Relief (PRR) when it is sold.
- If a partner transfers interest in the former matrimonial home to their former spouse within the three year ‘no gain/no loss’ deadline and remain entitled to receive a percentage of the proceeds when the home is sold, they are protected by this rule and will be able to apply the same tax relief to those proceeds that applied when they transferred their interest to their former spouse.
The policy objective is to make Capital Gains Tax rules fairer for separating spouses by extending the ‘no gain/no loss’ window. Couples will feel less financial pressure as they will have more time to transfer assets between themselves without incurring a charge to CGT, resulting in more money being available to meet the needs of the parties.
