It is very important to carefully study the stamp duty rules for divorce and separation and to find the right time. For example, Bob and Diane divorced in September 2020 and Bob (who had no other accommodation) was asked by court order to transfer his share of the marriage to Diane. Bob transferred his share to Diane in October 2020 and the assignment was exempt from stamp duty in the event of a divorce. Since Bob no longer had an apartment, he could buy another apartment without having to pay the additional 3% stamp duty rate. Nevertheless, the consequences of not following good tax advice can have a significant impact on a couple`s finances at a time when they are probably under pressure anyway. Changes to capital gains tax aspects of the capital gains tax system from April 6, 2020 may also have an impact on the tax analysis. People considering separation or divorce should therefore seek tax advice as soon as possible. Technical advice should always be provided when either party resides outside the UK. If it were clear that the separation was permanent, SDLT would not be payable under any circumstances. While the IHT effects of separation or divorce may be limited, both parties should, once a financial agreement has been reached, use their own estate and tax planning advice to ensure that their wills and other financial arrangements are updated to reflect their new status and to be as tax effective as possible. A court order If a couple contemplates a form of judicial separation – a divorce, annulment, judicial separation or separation order – and agrees to one or more estate transactions in relation to that event, no LTDS is payable as long as the couple is the sole party to the transactions and the transactions are, or if a property is transferred by judicial decision, SDLT would not be payable under any circumstances.
The same applies when it is transferred to a separation. This article referred to some of the most common tax considerations for couples considering separation, divorce or dissolution of a registered partnership and, while not exhaustive, this should highlight the crucial importance of tax advice as quickly as possible to ensure that negative tax consequences are avoided or mitigated to the fullest extent possible. Transactions related to divorce or the dissolution of life partnerships and in the context of a court decision of divorce, dissolution or separation are generally excluded from SDLT. These include transfers of the family home between spouses. Even after this event, transfers of an IHT fee are likely to escape because they are not intended to benefit for free, for example. B because they are made by virtue of a court decision or a compromise agreement between the parties. However, the creation of an ongoing trust, including deferred trust on the part of the country, depending on its terms, may create future IHT royalties. Each case will be factual and the key question will be whether the couple will be separated in circumstances that are likely permanent. If they are not yet permanently separated, the 3% increase can be paid at first, but can be recovered within three years if the separation/divorce becomes permanent.