TAX TIP OF THE WEEK - Spouse was a shareholder?

If your marriage has broken down and your spouse was also a shareholder in the company. Then act quickly to avoid the additional pain of a CGT bill.

It was recently announced there has been an increase in divorce rates. As well as deciding how the house will be split, if you are both involved in your ltd company then additional complication arises. 😒

For example, if your spouse does not play an active role in the company but is a shareholder then you will want to transfer these shares in the best way possible.

The problem is if this transfer is sorted out after the tax year in which you have separated then a CGT bill on the value of the shares could arise, which could be tens of thousands of pounds. 💰

Transfers of shares between spouses have a special treatment where they don’t trigger a CGT bill, however, HMRC considers you not to be married as soon as you separate. Not the date of the legal divorce. 🙏

Therefore timing is vitally important. To avoid CGT, arrange any necessary transfers of shares within the tax year that the separation took place. 🏷️

I hope this was helpful, for lots more tax tips and strategies get a copy of our 71 ways to save tax checklist.