Alison Palmer explores CGT and the timing of transactions for separating couples.

The basic rule is that a capital gain or loss is calculated by taking the gross disposal proceeds and deducting any allowable costs. However, where one spouse transfers an asset to the other at any point within the tax year of separation, it passes at ‘no gain no loss’ with the recipient spouse taking on the original base cost. Transfers beyond this point are deemed to take place at market value.

As the tax year ends on 5 April annually, it follows that a couple who separate in May for example, will have more time to maximise the spouse exemption compared to those who separate in March.

An example

A married couple jointly and equally own an investment property which they purchased for £...

Alison Palmer
Private Client Partner
Mercer & Hole

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