Neil MacGillivray: The breakdown of CGT on divorce and separation

clock • 4 min read

The Office of Tax Simplification (OTS) issued a second report on the 20 May 2021 in which it took the view that the current treatment of capital gains on separation and divorce is totally unsatisfactory and needs to change. Neil MacGillivray contemplates if capital gains tax on separation and divorce is set to become a thing of the past...

There were more than 91,000 divorces in 2018, and for tax year 2018/19 at least £8 million was paid in capital gains tax (CGT) by just under 300 taxpayers who stated divorce or separation as the reason for the gain in their tax returns. The true figures will be much higher than reported as there's no requirement for taxpayers to give the reason for transferring or disposing of assets. What seems apparent is the unforeseen cost, in perhaps an already expensive situation, of an average CGT bill of around £27,000. Married couples and civil partners have the advantage of being able to tra...

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