Capital Gains Rules Relaxed for Separations

Forest area with a road through the middle

Divorce or dissolution can be a painful process, but new rules should ease some of the tax complications couples face when splitting assets.

The changes relate to capital gains tax (CGT). Under UK tax rules, assets can be transferred between married couples and civil partners without triggering a CGT charge. But difficulties can arise once a relationship breaks down. 

Under the old rules this exemption only applied to assets transferred within the tax year of separation — giving some couples just months to sort their finances tax efficiently. 

The new rules, which came into force this April, give separating couples welcome breathing space. Couples now have up to three years to transfer assets without incurring CGT. If this transfer is part of a formal separation agreement, then there is no time limit on this CGT exemption. 

This relaxation of the CGT rules will also benefit couples who own a house together. Ordinarily the sale of a family home is not subject to CGT if it is your primary residence – under Private Residence Relief (PRR) rules.

However, if a couple splits and one partner moves out, before April this year they could have lost this PRR after nine months. This meant they could have faced a significant tax bill if the house was subsequently sold, and the gain was above the CGT threshold – currently £6,000. 

Now separating couples have at least three years to sell a property before this tax applies. In addition, the leaving spouse or partner can now elect how their PRR is split between a former family home and any other property they might have since acquired. 

The changes should help many couples who now don’t have to sell the family home during their separation, two hugely stressful life events, in order to avoid a substantial tax bill.


Review Your Financial Plan

To arrange an appointment, you can contact us via your usual MHA adviser, or directly on 01604 621 421 or

Important Information/Risk Warnings

The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.

This is a marketing communication, for general information only, and is not intended to be individual investment advice, a recommendation, tax, or legal advice. The views expressed in this article are those of MHA Caves Wealth or its staff and should not be considered as advice or a recommendation to buy, sell or hold a particular investment or product. In particular, the information provided will not address your personal circumstances, objectives, and attitude towards risk. Therefore, you are recommended to seek professional regulated advice before taking any action. 

Key Risks: Capital at risk. Past performance is not a guide to future performance. The value of an investment and the income generated from it can go down as well as up, and is not guaranteed, therefore you may not get back the amount originally invested.

Investment markets and conditions can change rapidly. Investments should always be considered long term. 

This Information represents our understanding of current law and HM Revenue & Customs practice as at June 2023. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. 

Tax and Estate Planning Services (including Trusts) are not regulated by the Financial Conduct Authority.