Separation and divorce

Tax consequences of marriage breakdown.

Curnow & Co can advise on the tax implications of separation and divorce, and offer practical guidance to individuals in Cambridge and beyond.

It is an unfortunate fact of modern life that many marriages do not survive. When separation, divorce, or dissolution occurs, there will almost inevitably be some tax consequences.

Allowances

The married couple’s allowance only applies for those couples in which at least one spouse or civil partner was born before 6 April 1935. The allowance ceases at the end of the tax year in which separation occurs.

Maintenance payments

Maintenance payments qualify for tax relief only where a spouse or civil partner or former spouse or former civil partner was born before 6 April 1935 and only if they are legally enforceable. This will be the case if they are made under a court order, a Child Support Agency assessment, or a legal deed of separation. Such maintenance payments must be made to the divorced or separated spouse or civil partner (if they are not remarried, or have not entered into a new civil partnership) for the benefit of him or her or of your child under twenty-one living with him or her.

The maximum tax reduction available is £326.

Maintenance payments received do not count as taxable income.

Transferring assets

Assets transferred between spouses or civil partners in a tax year during which they have lived together, including the year of separation, are exempt from capital gains tax (CGT) and inheritance tax.

From the end of the year of separation until the decree absolute, the former spouses or civil partners are still regarded as connected persons for CGT purposes, and therefore all transfers between them will be treated for tax as if made at full market value, even if no consideration changes hands.

Thereafter, transfers will be treated as ‘at arm’s length’ and therefore transfers will, for CGT purposes, be treated as disposals or acquisitions for only such amount as changed hands.

If you are in the Cambridge area and would like advice on the tax implications of separation or divorce, contact Curnow & Co today.

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Company details

01223 870879

Curnow & Co, 29 High Street, Harston, Cambridge, Cambridgeshire CB22 7PX.

Curnow & Co Limited Registered office address: Curnow & Co, 29 High Street, Harston, Cambridge, Cambridgeshire CB22 7PX. Incorporated on 25 February 2017. Company number 10639627.

About us

Curnow & Co are a firm of Chartered Certified Accountants based in Harston, Cambridge.

The company prides itself on delivering a friendly and professional service tailored to clients’ individual needs.

We provide a wide range of accounting, business and tax services, giving our clients peace of mind that their financial affairs are in safe hands.

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