The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
When a married couple divorces or a civil partnership is dissolved, there is likely to be a sharing out of the assets belonging to the former couple.
Accrued pension benefits, whether in a defined contribution or defined benefit pension scheme, may be a major asset. With the automatic enrolment of many employees into workplace pensions, this is only likely to increase.
If either or both of the parties to the marriage or partnership have accrued pension rights, then these are viewed by the court as part of the former couple’s assets for disposition on divorce.
If a prenuptial agreement is in place, andif it was freely entered into by each party with a full appreciation of its implication, the courts may uphold it, unless it would not be fair to hold the parties to it. While it is outside the scope of this guidance note to discuss the validity of prenuptial agreements, you should note that the existence of such a document could impact on pension arrangements on a break-up.
In this guidance note: ‘marriage’ applies similarly to civil partnerships, ‘divorce’ applies similarly to the dissolution of a civil partnership and‘spouse’ applies equally to a civil partner.
Some of the other terms used are explained in the Pensions glossary of terms guidance note.
As with all pensions matters, considering the impact of divorce on pensions may involve regulated advice andyou should exercise great care in this regard. See the Regulated investment advice guidance note.
This guidance note discusses the options available in terms of taking accrued pension benefits into account on divorce andthe tax consequences of the different arrangements.
Over time, the options available to the courts in terms of taking into account accrued pension rights on divorce have evolved. In summary, these are as follows:
pension rights may be balanced against another asset (‘pension offsetting’)
when one party’s pension eventually comes into payment, a portion of it will be paid
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
‘Hold-over’ relief allows for the deferral of a gain that would otherwise arise in relation to a disposal. No capital gains tax (CGT) is due in respect of the disposal, but the base cost of the asset for the transferee for the purpose of a future disposal is reduced by an amount equal to the gain
Normal due dateSmall companies (including marginal relief companies) are required to pay all of their corporation tax ― nine months and one day ― after the end of the chargeable accounting period.For example, where a chargeable accounting period ends on 31 December 2018, the due and payable date for
From 6 April 2015, an individual can elect to transfer 10% of the personal allowance (£1,250 in 2020/21 and 2019/20) to the spouse or civil partner where neither party is a higher rate or additional rate taxpayer. The legislation calls this the ‘transferable tax allowance’ but the GOV.UK website
Why is this important?Tax-free amountEach individual, whether or not they are resident in the UK, is entitled to an annual exempt amount when calculating the taxable amount of their chargeable gains for the tax year (although see the exceptions below). The annual exempt amount is also known as the
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.