HMRC introduce new GCT fairer process for separating or divorcing spouses for distributing assets between themselves.

These new changes come into effect on 6 April 2023, but what could it mean for you?

The aim of this new measure is to make the Capital Gains Tax rules that apply to separating or divorcing spouses/civil partners fairer by allowing more time to transfer assets between themselves without being subjected to Capital Gains Tax within that specific tax year.

Other special rules can also be applied to couples who have maintained a financial interest in their former home at the point of sale.

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This change comes about following a second report by The Office of Tax Simplification (OTS) [1] which looked at how Capital Gains Tax rules apply to individuals who separate/divorce and it was recommended that the government should extend the ‘no gain no loss’ window on separation. The government’s response in November 2021 agreed that the ‘no gain no loss’ window on separation and divorce should be extended.

This new legislation will be introduced in Spring Finance Bill 2023 and will allow: 

  • Separating spouses or civil partners be given up to three years after the year they cease to live together in which to make no gain/no loss transfers.
  • No gain/no loss treatment will also apply to assets that separating spouses or civil partners transfer between themselves as part of a formal divorce agreement.
  • A spouse or civil partner who retains an interest in the former matrimonial home be given an option to claim private residence relief (PRR) when it is sold.
  • Individuals who have transferred their interest in the former matrimonial home to their ex-spouse or civil partner and are entitled to receive a percentage of the proceeds when that home is eventually sold, be able to apply the same tax treatment to those proceeds when received that applied when they transferred their original interest in the home to their ex-spouse or civil partner.

The current rules mean that CGT is charged on a transfer of assets between married/civil couples who have lived together if the division of assets falls outside of tax year of separation or divorce. The new rules mean that couples will now have more flexibility to transfer assets within a longer 3 year time period before CGT is applied. For many, this will be a welcome change meaning there could be more money available to meet the financial needs of individuals and any children from the relationship. 

How will these new rules affect you?

Every couples’ financial situation is unique and it is important to ensure that you seek the right professional advice if you are separating or divorcing and find out how these new rules can affect your Capital Gains Tax liability.

Sheryl Perry Solicitors can offer expert family law advice and guidance around all financial matters relating to your separation or divorce. If you need professional advice, contact us today and make an appointment on 01245 463243 or email 

[1] Simplifying practical, technical and administrative issues, The Office of Tax Simplification: May 2021

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