Mark McLaughlin points out that transfers of business assets as part of court orders in divorce proceedings can have unwelcome capital gains tax consequences.
The end of a marriage (or civil partnership) is often difficult and stressful. Unfortunately, the tax rules could make a bad situation worse.
Gifts of assets
Where one unconnected individual gifts a capital asset to another individual, the gift is generally treated for capital gains tax (CGT) purposes as having been made at market value. Similar treatment applies to transfers between ‘connected persons’ in general.
However, if spouses are living together in the tax year and one of them disposes of an asset to the other, they are normally treated as if the asset transfer was for consideration resulting in no gain or loss.