Changes to Capital Gains Tax rules on divorce
Associate Simon Willis takes us through the significant implications for divorcing couples due to the changes in CGT on 6 April 2020.
In a previous article for this website (found here) I explained that capital gains tax (hereinafter ‘CGT’) is an issue which often needs to be considered when determining how assets should be divided upon divorce.
In that article I highlighted and signposted occasions when divorcing couples should seek tax advice as regards the potential implications of CGT on their situation.
Since writing that article it has been announced that there will be a change to CGT which could have significant implications for divorcing couples. The change is that with effect from 6th April 2020 the CGT exemption known as ‘Principle Private Residence relief’ will only continue to apply for 9 months after vacating the family home (the ‘final-period exemption’) – a 50% reduction on what was previously 18 months’ grace.
In effect, this means that if a person vacates the family home following relationship breakdown, a chargeable gain may start to accrue against their interest in the property after just 9 months. This does not necessarily mean that a CGT bill will arise (that will depend on various factors including the increase (if any) in the value of the property) but certainly a person caught by this rule should seek advice from a qualified tax advisor. If tax may be payable then that is an issue which should be considered as part of an overall financial settlement.
The implications of this rule change could be significant. It is said to be predicted that the measure will raise £170m over the current parliament.
We see a number of clients who, upon separation, vacate the family home but for various reasons do not deal with (or do not formally deal with) a financial settlement for a number of years thereafter. Beware that approach as, given the impending change to CGT, there could be tax consequences.
Anyone who is going through a separation should obtain legal and tax advice. Unfortunately as lawyers we cannot give you tax advice, but we can help you deal with the legal issues and work together in conjunction with your tax advisor to help try to achieve the best possible outcome for you.
If you are going through a divorce/separation and are concerned that the issues outlined above may apply to your circumstances please feel free to get in touch with our specialist team for a free, no obligation consultation on 01603 610911.
Charity of the Month: Sue Lambert Trust
Leathes Prior is delighted to be supporting the Sue Lambert Trust as our Charity of the Month for February 2026. Sue Lambert Trust is a leading charity in Norfolk offering free therapeutic counselling and support services to survivors of sexual violence and abuse.
Supreme Court ruling set to impact NHS - Children injured by NHS can claim damages for lifetime lost earnings
In February 2026, the Supreme Court passed a ruling which is set to significantly increase the amount of damages the NHS may have to pay for claims brought in respect of children injured at birth, as a result of medical negligence.
.jpg)
The Value of Planning Ahead: LPAs & Court of Protection
Putting LPAs in place allows you to choose trusted people to make decisions for you if you lose capacity in the future. This avoids the need for loved ones to make a costly and time-consuming deputyship application to the Court of Protection. With more people likely to experience conditions affecting capacity, more families may need to turn to the Court for support where no LPAs are in place.
Charity of the Month: Sue Lambert Trust
Leathes Prior is delighted to be supporting the Sue Lambert Trust as our Charity of the Month for February 2026. Sue Lambert Trust is a leading charity in Norfolk offering free therapeutic counselling and support services to survivors of sexual violence and abuse.
Supreme Court ruling set to impact NHS - Children injured by NHS can claim damages for lifetime lost earnings
In February 2026, the Supreme Court passed a ruling which is set to significantly increase the amount of damages the NHS may have to pay for claims brought in respect of children injured at birth, as a result of medical negligence.
The Value of Planning Ahead: LPAs & Court of Protection
Putting LPAs in place allows you to choose trusted people to make decisions for you if you lose capacity in the future. This avoids the need for loved ones to make a costly and time-consuming deputyship application to the Court of Protection. With more people likely to experience conditions affecting capacity, more families may need to turn to the Court for support where no LPAs are in place.
The case of the fake cases: another judgment on AI-hallucinations in litigation
The use of AI Large Language Models in litigation continues to generate headlines (and consternation from the judiciary). In 2025, it seemed that rarely a month went by without a new case on fake AI-generated case law. December was no exception, and the High Court has now issued a further warning regarding the use of AI by litigants.
Autumn Budget 2025: Agricultural Property Relief & Business Property Relief Changes
It was announced in the 2025 Budget that from 6 April 2026, changes will be made to agricultural property relief and business property relief. These changes bring APR and BPR in line with the nil-rate band rules, meaning unused allowances can be transferred to a surviving spouse or civil partner. This is a significant step towards making estate planning easier for families who own farms or businesses.
.jpg)
The Employment Rights Act 2025 is expected to come into force tomorrow (18 December 2025)
After an extended period of back-and-forth amendments between Parliament and the House of Lords, on 16 December 2025, the ERB finally received approval from the House of Lords, with the formality of Royal Assent due to take place tomorrow (18 December 2025). Head of LP Employment, Dan Chapman, explains...
Charity of the Month: The Matthew Project
Leathes Prior is delighted to be supporting The Matthew Project as our Charity of the Month for December 2025. The Matthew Project supports young people and adults across Norfolk, Suffolk, and Essex to overcome issues around drugs, alcohol, and mental health, empowering them to rebuild confidence and lead fulfilling lives.
Leathes Prior’s Milan Pandit appointed President of the Norfolk & Norwich Law Society
Leathes Prior Solicitors is proud to announce that Milan Pandit, Solicitor in our Corporate & Commercial Team, has been appointed President of the Norfolk & Norwich Law Society (NNLS) for 2025/26.
Commercial Lease Renewals: A guide for Landlords & Tenants
Commercial lease renewals are a topic that every commercial landlord and business that rents commercial premises should have at the forefront of their minds. It is essential for good succession planning, though it is often neglected until the expiry of an existing lease term is looming or once the existing term has come to an end and the tenant is holding over. In this article, our newly qualified solicitor, Maggie Berry explores the process that landlords and tenants can expect when navigating this complex area of law.
Our Guidance, Your Legacy: What is a Will, and why should I make one?
Not only is a Will one of the most important steps you can take to protect your loved ones and ensure your wishes are respected, but it also limits the likelihood of a claim/dispute following your death. To ensure your loved ones and the causes you care about benefit from your estate, a Will is essential to ensuring this happens. Find out more in this article.
Lease extensions: The essentials to getting started
Extending your lease can seem complex, but taking the right steps early can make the process much smoother. Jake Mowatt, Associate and Harry Smith, Trainee Solicitor in our Residential Property Team outlines the key essentials every leaseholder should understand prior to extending their lease.
Upcoming changes to bringing employment law claims: What these mean for you
The highly anticipated Employment Rights Bill (ERB) is set to increase the time limits in which employees can bring an employment tribunal claim. Gareth Stevens & Rose Woolterton explain what this means for employers & employees.
