As you all know, the new tax year has commenced despite all the difficulties resulted from the on-going pandemic. There are considerable changes which came into effect with the new Tax Year as of 06 April 2020, which may affect the divorcing couples.
Amongst the changes is the Capital gains tax (CGT) which is now payable within 30 days of selling or transferring a property.
If you are getting divorce and if you are jointly selling a property or you are transferring your share of a property to your ex-partner, or vice versa, the CGT will be due within 30 days of the sale of that property.
Then what do you, as a divorcing couple, need to do?
You must remember that not only CGT will become payable within 30 days but you will also need to complete a land transaction report within 30 days. It is therefore essential that you instruct a tax advisor in-time.
What other things you must be considerate of?
Since the purchase of your property, if you have lived in there for the whole time, then there is no CGT payable when you sell or transfer the property. This is called Principal Private Residence Relief (PPR).
This relief is only available for the time you lived in the property.
If, however, you have moved out of the property for over 9 months before the sale or transfer, then there may be CGT due when you sell or transfer your share of the property.
It is therefore crucial to remember that if you been out of the family property for over 9 months and you are selling the property, then you may be liable for CGT on sale of this property and you should seek tax adviceimmediately.
Is there any other reliefs available to you?
Prior to this new Tax year, i.e. 6 April 2020, if you had lived in a property as your main home at some point and then you let the property out you could be eligible for PPR relief as well as lettings relief for the period of time you rented the property.
It is important to note that this relief is now only available if you also lived and were present in the property at the same time as the tenant.
