The legalities surrounding divorce will soon be subject to modernisation, with an era of ‘no-fault divorce’ set to begin in Spring 2022. The related tax issues are likely to remain untouched and complicated, yet integral to achieving the best resolution.

Careful planning of any proposed divorce settlement should help to minimise the tax cost of transfers under any divorce. A couple of areas to consider are:

Capital Gains Tax (CGT)

CGT is one of the major tax considerations for divorcing couples and taking action during the tax year of separation is integral in reducing tax liabilities.

For instance, if the family property is being sold, this will influence the tax treatment that is applied. Relevant elections that could be made should also be considered as a way to preserve the main residence exemption for CGT purposes.

Inheritance Tax (IHT)

We work closely with all our clients to provide innovative bespoke solutions to fit with an individual’s circumstances, including limiting and managing your tax exposure in a divorce.

Your changing circumstances are likely to require a full review of your will and your current inheritance tax position. This process would allow you to ensure assets are protected for the next generation and tax liabilities are deferred, as well as identifying any other issues that may arise.

Find out more

Seeking advice early on in the divorce process is recommended to ensure assets are transferred as tax efficiently as possible and to avoid any unexpected tax liabilities.

If you would like to discuss your options, get in touch with our Private Client Services team on 01788 539000 or 0116 261 0061.


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