26 July 2022
HMRC have announced suggested changes to the capital gains tax position on the transfer of assets between spouses going through a divorce. The intention is to make fairer the rules that apply to spouses and civil partners who are in the process of separating. This follows on from the OTS report into how capital gains tax can be simplified. The main proposals are as follows:
For US taxpayers, it is important to also consider the US tax rules relating to divorce which remain unchanged. Generally, for US purposes no gain or loss is recognized on a transfer of property to a spouse within 12 months of the end of the marriage or when the transfer is incident to the divorce. A transfer is typically considered to be incident to a divorce if it is made pursuant to a divorce decree and occurs within 6 years of the cessation of the marriage. This rule does not apply where the former spouse is a non-resident alien.
We will keep you updated on these changes, if and when they come into effect.
For more information on Capital Gains Tax, read our expertise page.
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