The new tax year of 2020 brings some changes to Capital Gains Tax that could affect you if you’re going through the process of getting a divorce.
In the new tax year, Capital Gains Tax is now payable within 30 days of selling or transferring your property. Also before April 2020, if you had lived in the property within the last 18 months before selling it, you would not need to pay Capital Gains Tax. This timeframe has now halved to just 9 months.
If you’re getting a divorce and selling or transferring the ownership of your property, then you might be liable to pay Capital Gains Tax. However, with efficient planning and knowledge this could be avoided.
Our Divorce Solicitors can advise you on how to divide your assets in divorce, to help you get a fair divorce settlement and give you peace of mind that you won’t pay any unnecessary Capital Gains Tax.
For initial advice get in touch with our national team of Divorce Solicitors.
Capital Gains Tax is the tax you pay on any profit you make when you sell or transfer an asset (valuable) that has increased in value.
For many people, their property is there largest asset. Often if you’ve lived in your family home for some time, your property would have gained value by the time you choose to sell it. This means that you might make a profit from the sale, and so you may have to pay Capital Gains Tax on the money you gain.
It’s important to know that there are some exemptions to paying Capital Gains Tax on property. You will not need to pay Capital Gains Tax if:
If you’re concerned about Capital Gains Tax or need help making decisions about your family home in divorce, get in touch with our expert Divorce Solicitors.
Divorce can be a difficult time but keeping on top of your finances throughout the divorce process will give you security and confidence over your assets.
You and you ex may choose to sell your previously shared home in your divorce. If you haven’t lived in the property for the last 9 months before getting a divorce, for example if you moved elsewhere during your separation, you will need to pay Capital Gains Tax within 30 days of selling your family home.
You will also have only 30 days to complete a Land Transaction Report. One of our Conveyancing Solicitors or Conveyancers can advise you on how to do this.
Often in divorce, one person chooses to remain in the family home while the other moves out. This is common if there are children involved and you don’t want to uproot them outside of their family home.
If you haven’t lived in the property for 9 months and are transferring ownership to your ex then you may be liable to pay Capital Gains Tax.
You might be able to apply for an exemption from Capital Gains Tax by completing a Section 225B election. This would treat the property as though you had still been living there within the last 9 months.
Although this may seem like the right decision, it might not be beneficial for you to apply for a Section 225B election if you have already moved into a different property. This is because you can only claim tax relief on one property each tax year. This means that while you may get PPR Relief on your family home, you won’t get any kinds of tax relief on your new property within the same tax year.
You should get legal advice from one of our Divorce Solicitors before completing a Section 225B election. Getting legal advice will make sure that you are eligible for PPR Relief and that this is the right decision for you.
A Divorce Solicitor can advise you on the best way to handle your previously shared property and other assets in your divorce. We can help you settle your finances so that you can begin to enjoy life in your new home, without worrying about any extra expenses.
Fill in the form below to get in touch with one of our dedicated team members, or call our team today on: 0808 239 3465