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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Transfer of assets: between husband and wife or between civil partners: separation, divorce or dissolution: value of consideration where date of disposal precedes decree absolute or precedes the date the dissolution is made final

A husband and wife are connected persons by virtue of TCGA92/S286 (2). This is so even if they are permanently separated and it remains the case until the date of the decree absolute which ends their marriage.

Equally civil partners of each other are also connected persons by virtue of TCGA92/S286 (2). This is so even if they are permanently separated and it remains the case until the date of the final dissolution order which ends their civil partnership.

TCGA92/S18 applies to transactions between connected persons. Section 18(2) provides that such transactions are always treated as transactions otherwise than by way of a bargain made at arm’s length.

TCGA92/S17 (1)(a) goes on to provide that where a transaction takes place which is otherwise than by way of a bargain made at arm’s length, the consideration for the disposal of the asset is deemed to be equal to the market value of that asset at the date of disposal.

So, in general, a transfer of an asset between a husband and wife or between civil partners of each other who are permanently separated is treated as taking place for consideration equal to the market value of the asset transferred on the date of the disposal.

The only exception to this rule is if the asset is transferred in the year of assessment in which the couple became permanently separated. Such a disposal is treated by TCGA92/S58 as being at no gain/no loss, see CG22202.