Capital gains tax lump sum divorce

[Rachna83]

We have concluded the financial proceedings and a lump sum will be paid to me and house transferred to ex husband. Do I have to pay capital gains tax? I have looked online but very confused. A few points:
Decree absolute has not been applied for yet
Transfer is based on current market value
Ex husband lives in the property
I moved out Nov 2019
Thanks in advance

Do you own another property? If you don't I think (think!) you're not liable for CGT.

I’m not a tax advisor, and I recommend that you ask one. So speaking purely as another member of the public person, I would not think so. Capital gains tax is usually due if you have gains on invested capital....but in a divorce, you are merely dividing the marital assets between the two of you. So your settlement isn’t a capital gain, it’s merely your share of what is already there.

The only thing I can think of is if your lump sum isn’t cash but an investment portfolio, in which capital gains tax might logically be due on any increase in value during the tax year from the date you took over ownership to the date at close of tax year?

If the property were being sold, then yes, you would be liable to CGT, however, as it is a transfer, there is not, (unless you own your new home.)

In theory, your ex when he finally sells could be liable to pay the CGT attributable to your half of the gain over the period you were out, however, I can't imagine how that would ever get picked up.

in a divorce, you are merely dividing the marital assets between the two of you. So your settlement isn’t a capital gain, it’s merely your share of what is already there.

This is not so. Transfers between H and W are CGT free (the donee takes the asset with all the donor's gain, so has all the CGT to pay on disposal)

If your transfer of, say, shares takes place after the tax year of separation, or pursuant to a financial order, then CGT is payable by the transferring spouse. Quite a headache when, say, the wife is ordered to transfer shares in the husband's limited company. Especially if no one made provision to reimburse the wife, who generally in such circs transfers the shares for nothing, but is deemed to have transferred for full value by the tax authorities.

Really? We were advised that if pursuant to a court order then CGT not payable …?

You were advised wrong. What was the asset?

Well we haven’t completed the divorce yet. But it is in relation to houses. We own 2 and one is going to be transferred into my name and one into exes. Keen to avoid CGT and stamp duty if possible. Think we’re going to do it per consent order and then get a clean break order but were definitely told that a Mescher order means to CGT payable on eventual sale

This is not so. Transfers between H and W are CGT free

@MrsBertBibby. The OP stated that
Decree absolute has not been applied for yet
Which means they are still legally husband and wife? So why would it not be CGT free?

Transfers pursuant to an order are of necessity post decree.

Transfers between spouses cease to be eligible for the CGT spouse exemption if they take place after the end of the tax year of separation (different rules for family home.) The term separation does not require physical separation. Things like filing a petition are evidence of separation.

Toobusy, you need better advice I'm afraid.

Thanks @MrsBertBibby apologies for hijacking original thread …
We will make sure we transfer before getting court order then! What about stamp duty? Is that payable?

Stamp duty would be payable, yes.

If you did anything concrete towards divorcing before April 2021, though, you may have already missed the boat.

@MrsBertBibby stamp duty is not payable for transfers pursuant to an order in divorce.

There is a cgt exemption for transfers between spouses in relation to the family home beyond the year of separation provided you meet certain conditions. You all really need to get some specialist advice on this rather than asking random people on the internet (sorry - don't mean to be harsh but I have seen plenty of accountants misapply the law on this, let alone people whose friend got divorced last year and who are now an authority) .

Sorry @MrsBertBibby - the last part was not aimed at you!

Thanks for all the replies and discussion.
It seems very confusing to me. I had a barrister for the hearing and have used a solicitor throughout yet at no point was CGT mentioned. A friend mentioned it yesterday and I've been in a panic.
I will ask the solicitor to clarify on Monday and update.

Though it seems I won't have to pay and the solicitor is on the ball so surely would have mentioned it.

Stamp duty is indeed not payable if the transfer is done pursuant to an order.

It is payable, however, if the transfer is pre-divorce, (and therefore possibly CGT exempt.)

So you need to know

A) what Stamp duty would be on a pre order transfer
B) what CGT would be on a post order transfer
C) whether, in any case, you are still able to do a pre order year of separation transfer.

OP, you should be fine, since it is a transfer, not a sale. But definitely talk to your solicitor.