January can be the most miserable of months. With the Christmas and New Year celebrations over, the resolutions to lose weight already broken, and the long, cold, dark nights showing no sign of abating, it can really get people down.
January is also miserable for another reason – it is when the highest number of relationships fall apart. So many couples give it one last chance and stay together through Christmas, often for the sake of the kids, only to find in January that things haven’t improved and it is time to go their separate ways.
There is scant amount of good news in these scenarios, but one recent announcement by the government will give separating couples a little more peace of mind.
Capital gains tax
Currently, separating couples exchanging assets, be they investments, personal possessions, or property other than the main residence, must do so before the divorce is completed and in the same tax year as when they decided to separate, if they want to avoid paying Capital Gains Tax. This means that if they decide to separate in January, they may only have until April 6 of the same year to transfer any assets to one another.
If they transfer assets after the divorce is completed and in the following tax year, then CGT is likely to apply.
But changes in the law due to come in in April this year should relieve a lot of the stress around the transfer of assets. Following a review of the situation earlier this year, the government is extending the time couples can make CGT transfers, commonly called ‘no gain, no loss’ transfers, to up three years after they cease to live together, and for an unlimited time if the assets are subject to a formal divorce proceeding.
Farming families
The change will bring particular comfort to farming couples and families who are going through a breakdown. Dividing the assets of a farming business, particularly if both parties are directors, can be a significant undertaking that couples might not want to do when emotions are high and feelings of loss are raw.
Having an extended time to do this will enable couples to come to terms with what has happened before addressing the issue of the farm business assets and decide on the best outcome for all parties.
The new rules are due to take effect from April 6, 2023, the start of the new tax year.
If you are going through a difficult situation and need to discuss the best way forward for your farming business, get in touch on (01295) 270200 or email ianp@whitleystimpson.co.uk.
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