Navigating the financial complexities of a relationship breakdown is one of life’s greatest challenges. At Spherical, our London-based Chartered Tax Advisers provide specialist guidance on Capital Gains Tax (CGT) on divorce and separation, ensuring you benefit from the latest legislative changes while minimising your tax liabilities.
With the significant HMRC rule changes implemented in April 2023 and subsequent rate adjustments in 2024 and 2025, separating couples now have more time to reorganise their affairs. However, the window for tax-free transfers is not infinite. We help you understand these windows of opportunity and protect your financial future.
Strategic Tax Planning for Matrimonial Assets
Our advisors assess your total asset portfolio—including property, shares, and business interests—to develop a personalised CGT strategy.
1.The Family Home & PPR Relief
The family home is often the largest asset. We provide specialist advice on how to retain PPR relief for the spouse who has moved out. Under the new rules introduced from 2026, you can often treat the property as your main residence for tax purposes until the date of sale, preventing a significant tax bill when the house is eventually sold or transferred.
2. HMRC Compliance: The 60-Day Rule
Since April 2020, UK residents must report and pay CGT on the disposal of residential property within 60 days of completion. Our team handles the meticulous preparation and filing of these returns to avoid costly penalties and interest.
Tax Pitfalls for Business Owners during Divorce
When a marriage involves a private limited company, the stakes are significantly higher. HMRC’s view of business asset transfers is complex, and failing to plan can lead to a “dry tax charge.”
The Dividend Trap: If a company buys back shares to facilitate a divorce settlement, HMRC may tax the proceeds as a Dividend rather than a Capital Gain.
BADR Rate Increases: Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) is changing. The rate increased to 14% in April 2025 and will rise to 18% in April 2026. Timing your settlement is now more critical than ever.
Hold-over Relief: You may be able to defer tax by “holding over” the gain to your spouse, but they will inherit your original cost base. This must be factored into the “fair value” of the split.
Frequently Asked Questions (FAQs)
Do I pay Capital Gains Tax if I transfer my share of the house to my ex?
Generally, no. If you transfer your interest within three years of the tax year you separated—or at any time if it is part of a formal court order—the transfer is treated as “no gain, no loss.” No immediate tax is due, but the receiving spouse takes on the original cost for future tax purposes.
What happens if I moved out years ago? Can I still claim PPR relief?
Yes. If your ex-spouse still lives in the home, you can elect to treat the property as your main residence for the period you were absent, provided you haven’t nominated another property as your main residence for tax during that time.
What is a “Mesher Order” and how does it affect my taxes?
A Mesher Order defers the sale of the home (e.g., until children finish school). Under current rules, the spouse who moved out can still claim PPR relief when the house is finally sold, even if it is many years later, preventing the “tax trap” that previously penalised departing parents.
We separated before April 2023; do the new rules apply to us?
The new rules apply to any disposals (transfers or sales) that take place on or after 6 April 2023. Even if you separated years ago, if you are only now transferring assets as part of your final settlement, you can likely benefit from the extended windows.
Why Choose Spherical for Divorce Tax Advice?
Up-to-Date Expertise: We specialise in the 2024–2026 legislative updates.
Tailored Solutions: We provide pragmatic, sensitive, and bespoke advice for high-net-worth portfolios.
Confidentiality: We work seamlessly with your legal counsel with the utmost discretion.
Ready to protect your assets?
Contact Spherical today for advice on capital gains tax on separation and divorce or to request a Single Joint Expert Report for FDRs and court hearings.