Policy paper

Draft legislation accessible version

Published 20 July 2022

1 Chargeable gains: separated spouses and civil partners

(1) TCGA 1992 is amended in accordance with subsections (2) to (5).

(2) In Part 3 (individuals, partnerships, trusts and collective investment schemes), in Chapter 1 (miscellaneous provisions), in section 58 (spouses and civil partnerships), for subsection (1) substitute—

“(1A) If an individual (“A”) disposes of an asset to another individual (“B”) in circumstances where any of subsections (1B) to (1D) applies, A and B are to be treated as if B acquired the asset from A for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to A.

(1B) This subsection applies where the disposal is made while A and B—

(a) are married to, or are civil partners of, each other, and
(b) are living together.

(1C) This subsection applies where the disposal is made—

(a) while A and B are married to, or are civil partners of, each other,
(b) at a time when A and B have ceased to live together, and
(c) before the earlier of—

(i) the last day of the third year of assessment after the year of assessment in which A and B ceased to live together, or
(ii) the day on which a court grants an order or decree for A and B’s divorce, the annulment of their marriage, the dissolution or annulment of their civil partnership, their judicial separation or, as the case may be, their separation in accordance with a separation order.

(1D) This subsection applies where—

(a) A and B have ceased to be, or are in the process of ceasing to be, married to, or civil partners of, each other, and (b) the disposal of the asset is in accordance with an agreement or order within subsection (2)(a) or (b) of section 225B (disposals in connection with divorce etc).”

(3) In section 225B (disposals in connection with divorce etc)—

(a) in subsection (1)(b), after “to” insert “someone other than”;
(b) in subsection (3), after “disposal to” insert “someone other than”.

(4) After section 225B insert—

“225BA Deferred payments on disposals in connection with divorce etc

(1) This section applies where—

(a) an individual (“A”) ceases to live with A’s spouse or civil partner (“B”) in a dwelling-house or part of a dwelling house,
(b) immediately before A ceases to live with B, the dwelling-house or part is A’s only or main residence,
(c) A disposes of, or of an interest in, that dwelling-house or part to B (“the initial disposal”), and
(d) the initial disposal is in accordance with a deferred sale agreement or order.

(2) If—

(a) in accordance with the deferred sale agreement or order A receives a sum in respect of a share of any profit made by B upon B’s disposal of, or of an interest in, the dwelling-house or part, and
(b) the receipt of that sum would be treated (apart from this section) as a disposal falling with section 22 (disposal where capital sums derived from assets), that receipt is to be treated for the purposes of this Act as a gain attributable to the initial disposal but accruing to A at the time the sum is received.

(3) In this section, a “deferred sale agreement or order” is an agreement or order of a court which—

(a) is within paragraph (a) or (b), as the case may be, of section 225B(2) (agreements and orders of the court in relation to divorce etc), and
(b) includes a term entitling A to receive a share of any profit made by B as mentioned in subsection (2)(a).”

(5) In Part 8 (supplemental), in section 288 (interpretation), in subsection (3), after “partner” insert “(however expressed)”.

(6) The amendments made by this section apply in relation to a disposal made on or after 6 April 2023.