Get a rubbish Valentine’s Day present? Get a divorce…
As we all know, yesterday was 14 February, the day when most people commit suicide. Lovely. It is also, traditionally, the day when you present your loved one with a thoughtful and carefully chosen gift. For example, on our first Valentine’s Day together, my husband bought me some hilarious plastic ice cubes shaped like nob ends. Oh, the romance. This year he bought me a pink screwdriver. With hearts on.
So if you are dissatisfied with your Valentine’s offering, why not get a divorce? Unfortunately, despite scouring HotUKDeals I couldn’t find an offer on divorce lawyers, but have this handy tip for free- don’t split up until 6 April.
You may think this is a ridiculous thing to say, after all, if your VD gift was so bad, you gotta go now, right? Wrong. Divorces are generally acrimonious, and why give yourself a tax headache on top of everything else?
As revealed yesterday, being married does have some tax advantages, one of which being the ability to transfer assets between spouses free of capital gains tax. So, what happens when you get divorced? You transfer assets between you, but you are NO LONGER MARRIED. Bit of a problem.
Of course, you could always transfer all the assets before the decree absolute comes through, because then you aren’t properly divorced, right? Wrong. The capital gains tax exemption for spouses ceases to apply on separation, not divorce, but will continue for the remainder of the tax year of separation. This is why you should grit your teeth until 6 April, as you then get 365 days to wrangle over who gets the cat*, rather than just 1 day if you separate on 5 April (which is the last day of the tax year, in case you didn’t know).
Now, before you start scheduling explosive arguments for early April, there is a concession that allows you to transfer a share in the family home as part of a divorce agreement, with no tax consequences, so if that is the only/main asset to quibble over, you will probably be ok. Otherwise, however, an estranged spouse is a connected person, so even if you give the assets away, a capital gain based on market value will arise to the person disposing of the assets. So it’s not enough that he/she screws you for everything you have, the taxman will then want his share of the spoils you never got.
I wonder if the taxman got any Valentine’s cards…
*actually a cat is not a chargeable asset for tax purposes. But you know what I mean