January 8 is notoriously known as ‘Divorce Day,’ because of the spike in couples considering ending their marriages after the holidays.
January is, in fact, the busiest month of the year for divorces to be filed. Presumably, new year’s resolutions and everyone assessing their life as it stands – plus goals for the future, and avoiding upsetting their children over Christmas – combine to give people the push to make drastic changes.
Sadly, 42 per cent of marriages now end in divorce, with the average marriage now lasting just 12 years. According to data analysed by the divorce support service Amicable, more than 40,000 people will search “divorce” online in January.
The difficult and emotional journey of embarking on a divorce tends to focus on family issues, with finances being a major consideration. So there are many tax issues to think about before a separation or divorce.
The following tips relate to some of the tax issues that may crop up if you’re thinking about filing for divorce.
- Look at the assets you and your partner would want to keep after the divorce. This includes items such as cash, shares and property. If one person wants cash but other assets are allocated in place of money, you must work out the Capital Gains Tax due after the assets would be sold in order to generate the cash. (This is because they would only be left with the net amount.)
- Calculate the value of your net assets including the property and any shares you may hold in a family business. These will probably be divided between you.
- If one person pays maintenance to their ex-partner or for their children after the divorce, you’ll need to check out the tax consequences of this.
- Complicated pensions and life assurance policies should be professionally assessed. It’s always worth taking proper tax and investment advice at this stage.
- You might both need to file tax returns, depending on your income and any gains following the divorce.
Tax rules are complex and you’ll want to avoid the additional stress of any unexpected tax bills. We’re always here to advise on this – and knowing how upsetting divorce can be, we provide a strong cup of tea and a box of tissues, if need be. We can help you make sure your figures are in order so that the lawyers have a clear picture to work from. Call us for advice on 020 8530 0720 or email firstname.lastname@example.org.