Tax Implications of divorce
Tax On Divorce » August 19, 2019
Divorce day
The dark days of early January can coincide with an increase in the number of couples seeking a divorce. Sofia Thomas considers some of the consequent tax implications. Less than two weeks into the new year, family lawyers will already have faced a flurry of enquiries marking ‘divorce day’.
In most years, these peak on the first working Monday in January. Although the process from initial enquiry to final divorce can take years, the parties – whether they are married or in a civil partnership – should consider the potential tax implications from the outset.
For simplicity, in this article I will refer to spouses, but this also encompasses civil partners. Unforeseen tax implications can have major impacts on clients and the most prevalent areas of contention tend to relate to:
- domestic tax issues, such as capital gains tax on the main home and the potential loss of only or main residence relief; and
- foreign aspects of divorce
Tax implications of divorce
KEY POINTS
- Divorce enquiries peak in January and these will have tax implications.
- Property adjustment orders can be made to the matrimonial home.
- Capital gains tax relief must be considered if there is a deferred trust of land on the main residence.
- Check whether the connected persons rules apply to property transfers.
- Stamp duty land tax will not apply to property transfers made under a court order.
- Property transfers before the final divorce could be classed as remittances if money or assets are brought into or enjoyed in the UK.
To read the rest of the article by visiting Taxation website.