When a couple separates or divorces, it is unlikely to think about any tax implications. However, apart from the emotional stress, tax issues can also have a significant impact.

For example, when a couple is together, there is no Capital Gains Tax (CGT) payable on assets gifted or sold to a spouse or civil partner. However, if a couple separates and does not live together for an entire tax year or get divorced, CGT may be payable on assets transferred between the ex-partners.

This effectively means that the optimum time for a couple to separate would be at the start of the tax year so that they would have up to a year to plan how to transfer their assets tax efficiently. Obviously, in the real world, most couples will have far more on their minds than deciding to get separated on a particular day, but they should consider these issues.

It is also essential to make a financial agreement agreeable to both parties. If no agreement can be reached, going to court to make a ‘financial order’ will usually be required. The couple and their advisers should also give proper thought to what will happen to the family home, any family businesses, and Inheritance Tax implications.