1 January often represents a new start for many, and for some, a fresh start at the beginning of a new calendar year can involve making the decision to separate or divorce. However, should those considering divorce or separation actually see the start of the new financial year on 6 April as the start of their new beginning?
From a financial perspective, tactically, the answer is likely to be yes, as they could be heavily financially penalised if they separate or issue divorce proceedings in the last quarter of the financial year.
This is because married couples can transfer assets between themselves without any tax consequences. Once separated, there are tax implications to be mindful of. Couples between marriage and divorce will have until the end of the last tax year in which they lived together to transfer assets without triggering any Capital Gains Tax ('CGT') liability. Any transfers made after that period will be subject to CGT and could result in a hefty tax bill.
Delaying the start of the separation/divorce process a few months until the start of the new financial year enables separating couples to make the most of the CGT concession - potentially saving them thousands of pounds!
If you are experiencing difficulties in your relationship, please do get in touch to find out how we can help.
Once you have a court order, a deed of separation or any circumstances that suggest your split is forever, you are “on the clock” to at least get your settlement sorted and assets transferred before the end of the tax year.