Whilst I may not be the first to congratulate you on getting through another stamp duty holiday, I certainly raise my hat to you all as you breathe a huge sigh of relief that you have come out the other side and we are now into April. One Solicitor wrote to me this week and said she thought the COVID holiday was enough, and she would never do it again – and yet here we are.

As we move into Q2 at BHP, we have set our focus areas for the coming months and you can expect to receive informative and practical content from me, on our socials, my LinkedIn account and our podcast. We’ll be covering mixed-use and commercial reliefs, dilapidated or uninhabitable buildings, and we kick off April with SDLT and possible CGT on Divorce, Separation and Transfers of Equity.

As with many legislative provisions, there can be unintended consequences—especially where a client’s specific circumstances don’t fall neatly within the rules. This can lead to unexpected tax charges and client confusion. The operative provisions when considering a divorce or legal separation are Paragraphs 3 and Schedule 3A, Finance Act 2003.

To note, there is no general exemption from SDLT for transactions between spouses or civil partners. SDLT is chargeable on any cash consideration or debt, which always frustrates clients looking to transfer equity in a property between themselves when the property is subject to a mortgage. SDLT is payable on the debt which seems to be a double whammy. The transfer of one spouse's share in the equity to the other will not attract SDLT if it is a gift, and the receiving spouse does not assume any mortgage debt.

There is an exemption for various transactions between spouses or civil partners which are carried out concerning divorce, dissolution, or separation. A transaction is exempt if it is effected between spouses:

1. pursuant to an order of the court;
2. property adjustment orders for example pursuant to a court order made under ss24 or 24A of the Matrimonial Causes Act 1973; or
3. under a formal written agreement made in contemplation of, or in connection with, divorce, annulment, or judicial separation.

But what happens where the divorcing or separating couple are not simply removing one name from a title and purchasing a second home for the estranged partner, but are also equalising other properties held jointly between the parties during the marriage.Finance (No. 2) Act 2023 provides that for disposals on or after 6 April 2023 there is a no gain/no loss window:The CGT no gain/no loss window is extended to cover disposals up to the earlier of:

1. The end of the third tax year after the tax year in which the separating couple cease to live together.
2. The date the couple divorces, their marriage or civil partnership is dissolved or annulled, or they separate as part of a separation order.

In addition, where an asset transfer between former spouses or civil partners is part of a formal divorce agreement, it will be at no gain/no loss for CGT purposes, regardless of when it occurs.It’s also essential to consider whether Principal Private Residence (PPR) relief applies to former main homes, taking into account both the length and quality of occupation.So how can I help?

‍Following the changes to SDLT rates on 1st April all our guides have been updated and we are here to support, advise and relieve you of the file that is giving you a headache sitting on your desk. The client whose brother is buying out his partner, the couple who have decided to approach their separation amicably and want to buy a new house for the wife and children to move into or the couple who have a portfolio of properties which need to be divided and transferred.

We are a phone call or an email away, so please get in touch.