One of the most anticipated announcements during the Budget Chancellor Rachel Reeves will be giving tomorrow is a Capital Gains Tax change.
Most experts are predicting the Labour Chancellor will uplift the tax rate and drop the threshold limits, which could have a widespread effect on businesses but also unintended consequences for couples that are splitting up.
Judit Kerese, lawyer at Stowe Family Law, explained that CGT is a major part of financial settlements in divorce negotiations as it can heavily impact the division of assets between a former couple.
She revealed: “Over the past few weeks, we have been advising couples to delay their financial settlements until there is more clarity over CGT, and to seek expert financial advice.”
Some of her own clients have had to keep their divorce at a complete standstill until the anticipated changes are announced on October 30.
If the CGT rate is increased, the expert warned: “Significantly more separating couples are likely to feel the impact of CGT after the Budget is announced, especially as the threshold reduced to £3,000 earlier this year.
“Those with second homes or holiday rentals will see the impact of the increased new rate as they go through the process of dividing their finances and selling joint assets.”
Judit urged couples in the midst of a divorce to get professional advice, both legal and financial, to truly understand the extent the Chancellor’s expected changes could have on their split.
If you have finalised your financial settlement, these changes could prove to be an even bigger issue.
The lawyer explained: “Once a financial order is made by the court, it is extremely difficult for it to be amended, so the ex-couple may be faced with less income from sold assets or inheritance than they had anticipated.
“If an informal agreement has been reached between a separating couple and they subsequently wish to renege on this, there is a risk that they still have to proceed with the agreement, despite the impact of the Autumn Budget.”
