Do I pay Capital Gains Tax when transferring assets to my ex-spouse during divorce in 2026/27?

Full answer

When spouses or civil partners are living together, asset transfers between them happen on a "no gain, no loss" basis, meaning no Capital Gains Tax arises and your ex inherits your original base cost. Since the rules were extended, this treatment continues for transfers made up to the end of the third tax year after the year in which you stop living together. There is no time limit at all where the transfer is made under a formal divorce or dissolution agreement or a court order, so most divorce settlements escape an immediate CGT charge. The receiving spouse simply takes over your acquisition cost and pays CGT later if and when they eventually dispose of the asset to a third party. If you transfer outside these windows, the disposal is treated as taking place at market value between connected persons, and a gain may crystallise. For 2026/27 the annual exempt amount is just £3,000, with CGT charged at 18% (basic-rate band) and 24% (higher/additional) on residential property, and 18%/24% on other assets. There is also a specific relief letting a spouse who has left the family home still claim Private Residence Relief on their share when it is later transferred to the remaining spouse, or take a share of the eventual sale proceeds with PRR preserved. Note that CGT is a UK-wide tax, so these rules apply identically in England, Wales, Scotland and Northern Ireland (Scotland's separate income tax bands do not affect CGT). However, if the transfer involves land or property changing hands for consideration, separate Stamp Duty Land Tax (England/NI), LBTT (Scotland) or LTT (Wales) may apply, though transfers purely on divorce by court order are generally exempt. Inheritance Tax spouse exemption is unaffected until divorce is finalised. Always get the settlement documented to lock in the no gain, no loss treatment.

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