Is tax factored in when calculating a Financial Settlement

[starbaker66]

My STBX has cash reserves on non-trading businesses. He hasn't drawn the money out previously because he was too astute(tight) to pay tax on the money. However, now he's facing the prospect of a financial settlement, he wants to deduct the tax liability before he puts the rest in the "joint pot". Can he do this? If so, the funds will be severely depleted!

I am not an expert, but yes, if he pays the tax then you only have claim on what's left, not pre-tax.

Hi all. On the subject of divorce settlements. I'm due to receive a large sum of money. And the house transferred into my name. But I'm not sure what the tax implications are on this? How you go about paying it. Very Confused

I don't think there are any tax implications? Presumably, the money you are due to receive has already been taxed? For instance, if it is an accumulation of funds, either from income or investments, it will have been taxed at source - it's surely just a re-distribution, so no capital gain. If the house is in joint names, and it is to be transferred to you as part of a divorce settlement, then that would also constitute a re-distribution of assets/funds? You should take some advice, but I'd be interested to know how you get on?

Thank you starbaker66 I will speak to my solicitor about it. If she cannot help me than I will speak to CAB. I will let you know how I get on.

I can not stress this enough.

So kit ask mumsnet. Get yourself to a divorce lawyer, fast.

Sorry I meant "do not ask"

And if your solicitor can't help you on this issue, then he/she is useless and get yourself a new one.

Holidayhoory I didn't realise that you are you in charge of mums net and what people post! It was merely a question to see what other people's experiences of this was that's all. I thought that's what net mums was about to be able to talk to people. Get advice drawn on own experiences. Not negitive comments.

Sorry wrong site mums net

Well, now you know Dayes!

Know what! Your in charge?

Are you trying to bully me? Hey? Because if that's the case let's let the world see!

Transferring the family home on divorce is not taxable.
There is no tax to pay transferring 'savings' on divorce.
The HMRC website is full of information.

Any transactions that would normally require tax to be paid, eg. sale of non family home properties which could attract capital gain tax, etc. should have the tax paid before the financial settlement.

Of course you need to deduct the tax liability before calculating the settlement - part of the money is due to HMRC and is not available to be divvyed up between you.

Also, transferring the family home could be taxable....it depends on the circumstances of the divorce. No CGT arises whilst the property is used as a family home, however, once one party moves out there is only an 18 month period of grace before a CGT liability starts to accrue for the person that has moved out.