No-fault divorce: don’t skip on advice

  • 5th November 2022
  • Shorts
no fault divorce

The number of couples filing for divorce or dissolution has surged after simpler ‘no-fault’ divorce laws came into force this April. But the simpler process shouldn’t mean cutting corners on financial advice.

Spouses or civil partners can now file for divorce (or dissolution of a civil partnership) jointly online, stating their relationship has broken down irretrievably. Before, one partner needed to prove the other has acted unreasonably or committed adultery. Online divorce applications have risen four-fold from a low of 2,000 a month to 8,000 a month.

While these divorces may be streamlined, separating couples should still seek financial advice, particularly if they are splitting assets like property and pensions.

Evidence suggests that fewer than two in ten divorces or dissolutions have pension sharing orders, although these are often the most valuable financial asset, after the family home.


Capital gains considerations

Couples owning property jointly may also have capital gains tax (CGT) considerations, particularly if one partner is transferring their share to their former spouse.

Although there is normally no CGT on the sale of a primary residence, if a couple splits, and one now lives elsewhere, this tax might apply.

However, if the property is transferred within the tax year of separation no CGT is due. This makes it important to get the timing of a sale or
transfer right, as it could potentially result in a saving of thousands of pounds.

New rules from April 2023 should make this aspect of life easier for splitting couples. Spouses and civil partners will have up to three years to make what are known as ‘no gain, no loss’ transfers of assets between themselves after they stop living together.

These changes should make the CGT rules fairer and give the parties more time to negotiate a fair split of assets, rather than rushing proceedings in order to meet an artificial tax timetable.

The new legislation will also introduce some rules for those who maintain a financial interest in their former family home after separation. This will allow a spouse or civil partner to claim private residence relief (PRR) when it is sold, meaning they won’t have to pay CGT on this transaction.


The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.