What a welcome relief to read over the weekend that the Office of Tax Simplification has reported recommended that the current Capital Gains Tax 'window' for divorcing couples to be able to transfer property between them should be extended to two years.
At present, a couple has only until the end of the tax year in which they separate to move jointly held property into one or other of their names without incurring CGT on any gain. For a couple who split up in, say, January, this can mean a frantic race to reach - and implement - a financial settlement before 5th April. At a time when a couple may need to be taking considered advice and reflecting carefully on how best to craft a financial settlement, the ticking clock creates hugely unwelcome pressure and may make an already acrimonious situation even worse.
Extending the period to 2 years seems eminently sensible and very much in line with the legal change to 'no fault' divorce that's due to come into force this year. It remains to be seen whether the government will actually take up these recommendations but we'll keep our fingers and toes firmly crossed!
OTS recommends CGT deadline extensions for divorces and property sales By Amy Austin The Office of Tax Simplification has recommended the government extend the payment deadlines for Capital Gains Tax for divorcing couples and those selling property. In its 125-page second report looking at overhauling the CGT system, published last night (May 20), the OTS said it had found many sellers were missing the deadline since it has been cut to 30 days. Rules introduced in April 2020 meant that a UK resident disposing of a residential property in the UK making a gain which is liable to CGT has 30 calendar days from the date of completion to tell HMRC and pay any tax owed. But the OTS said this was a “very ambitious target” and had received many “negative responses”. It found that out of 51,300 CGT returns filed with HM Revenue and Customs between April 6, 2020 and January 6, 2021, 16,800 were filed after the 30-day deadline. The OTS has called on the government to consider doubling the deadline to 60 days, or to mandate estate agents or conveyancers to distribute HMRC provided inform...