Couples separating in England and Wales can now benefit from extended Capital Gains Tax (CGT) relief when transferring assets — a change that continues to apply in 2025.
Introduced in April 2023, this CGT reform allows separating spouses and civil partners up to three years after they stop living together to transfer assets without triggering Capital Gains Tax. If the transfer is made as part of a formal divorce agreement (such as a Consent Order), there is no time limit at all.
(Source: https://www.gov.uk/government/publications/husband-and-wife-civil-partners-divorce-dissolution-and-separation-hs281-self-assessment-helpsheet/hs281-capital-gains-tax-civil-partners-and-spouses-2025)
Why is this important?
Before this change, separating couples had only until the end of the tax year of separation to make tax-free transfers. This narrow window often created pressure to finalise complex asset divisions in a short time — especially when dealing with property, shares, or business interests.
The updated rules now give couples more time and flexibility to organise financial matters fairly and with less stress.
What counts as a tax-free transfer?
Common examples of CGT-exempt asset transfers under the new rules include:
- Property (including buy-to-let or second homes)
- Investments (such as stocks and shares)
- Business assets
- Transfers made under court-approved financial orders
If these assets are transferred within three years of separation — or as part of a financial order at any time — no CGT is payable.
How can couples benefit?
- More time to negotiate fair settlements
- Reduced pressure to rush property sales or asset transfers
- Less financial risk for both parties during the divorce process
- Better alignment with the formal divorce timeline, which can take 6–12 months
Plan your financial order carefully
To benefit from the CGT exemption with no time limit, the asset transfers should be included in a court-approved Consent Order. Without this, the three-year rule applies. Couples are strongly advised to get professional support when preparing financial documents to ensure they qualify for the relief.
