During my last blog I looked at the tax benefits of marriage, so forever being the optimist, this time I have decided to look at the reverse and consider what happens on a divorce.
We are often asked to provide tax advice on a separation/divorce so that the potential liability for either party can be factored into any settlement agreement. The settlement agreement will inevitably involve dividing up the assets and transferring ownership from one party to the other. As a result, the primary tax to consider is capital gains tax.
All the time a married couple are living together, they are able to transfer assets to each other freely without creating a capital gains tax liability. However as soon as they separate in circumstances which are likely to be permanent, this tax benefit ceases from the end of the tax year in which they separate.