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Tax Considerations

As one may expect, there can be various tax consequences of dealing with assets and property when couples separate. 

It is important to bear this in mind at all times when dealing with almost any aspect of family law, be it the sale or transfer of assets upon divorce, the net valuation of current or future assets or the setting up of a trust to hold a property for the benefit of a child (please see details of claims on behalf of a child) etc. 

This section does not propose to consider these points in any detail, but simply to flag up issues which commonly arise and which need particularly careful attention:

  • the domicile of a couple in question must be considered and the implication of any foreign taxes taken into account
  • the occupation of properties may change upon separation and this may affect the operation of the principal private residence exemption for capital gains tax purposes
  • transfers of assets between spouses are capital gains tax neutral provided they take place within the tax year of separation; in those circumstances the tax is not avoided but rather it is rolled over and there is no immediate chargeable event
  • when considering the 'pot' available for distribution between married couples, it is important to look at the net asset position and it may be that there are pregnant capital gains which need to be considered
  • in the event of a settlement of property order for a child careful consideration needs to be given to the tax treatment of any arrangement to minimise its impact (please see details of claims on behalf of a child)

If specialist expertise is needed, often our Private Client team will be able to advise on these points, or it may be necessary to take expert accountancy advice and we have strong links with professionals who can assist both in England and internationally.