Unfortunately, for many married couples in the UK, the start to 2019 has been a far from happy period with ‘break up bombshells’ being dropped up and down the land.
According to data analysed by divorce support service Amicable, more than 40,500 people will search “divorce” online in January, and in January 2018, Relate received a 24% increase in calls to their helpline compared with the average month.
It is also a busy time for lawyers, who are on the front line when divorce rears its head, with January 8 now being dubbed as Divorce Day in the UK. However, the financial implications of a family break up can be as complex as the emotional effects of a long-term relationship ending, and like most things in life, timing is of the essence.
Grasping the nettle and using the New Year as a landmark to end an unhappy marriage is undoubtedly a bold move, however, using the tax year end would perhaps prove far more prudent. This extract from a recent Financial Times article explains why.
“When you are married you can transfer assets back and forth between yourselves with no consequences whatsoever. When you are not, you cannot: every transfer attracts capital gains tax (CGT) to the notional gain made by the transferor. When you are in between marriage and divorce something in between happens. You have until the end of the last tax year in which you lived together to transfer assets CGT-free. After that the concession goes. Let’s say, for example, that you own a second home. You transfer it (reluctantly) to your spouse as part of your settlement. It is worth £50,000 more than when you bought it. Hand it over before the end of the tax year and that’s no problem. Do it after and (assuming you have used up your £11,700 allowance already) you will pay 28 per cent CGT on it, residential property attracting a rate eight percentage points higher than other assets.”
And it may be of no coincidence that the average age of divorce is 46 for men, and 44 for women – the period when individuals reach their peak earnings and inheriting potential. So getting things right financially is critical and seeking the advice of an Independent Financial advisor could prove a very wise decision.
Understanding your personal financial situation before you enter into discussions regarding splitting the family wealth is imperative to avoiding unnecessary conflict. With the use of state of the art software we are able to clearly show the family finances, to include all savings, investments, pensions and property. We are able to “future forecast” and stress test financial scenarios so that both sides know what their financial future will look like but how will impact their ex-partner. Certainly an aid in achieving a respectful, non-confrontational divorce.
If you would like to like to arrange a consultation to talk about restructuring your finances, please call Tim Norris or Alan Clifton on 0800 731 7614.