The capital gains tax deadline when a client separates
A married couple separates but stays married while a financial settlement is agreed. HMRC counts the capital gains tax window from the date they stopped living together, a date the accountant may only hear about at the next year-end meeting.
9 min read · 29 September 2026 · Altro Partners, by Equity & General
3 years
is how long separating spouses have to move assets between them without a capital gains tax bill, once they stop living together and before a formal agreement is in place.
HMRC helpsheet HS281, rule effective 6 April 2023
A capital gains tax rule that changed on 6 April 2023 gives separating couples until the end of the third tax year after separation to move assets between them without a bill, where before they had only the tax year of separation.
Marriages that end in divorce are lasting longer
The Office for National Statistics published its latest count of divorces in England and Wales on 23 September 2026: 102,879 opposite-sex divorces in 2025, and a median marriage length at divorce of 13.0 years, the longest since the series began in 1963.
Thirteen years is long enough for a workplace pension to have become a director's pension, for a starter home to have become a portfolio of let properties, or for a sole trader to have become a shareholder in a family company. The accountant who has prepared that client's return every year already holds the figures. The date the couple stopped living together may reach the accountant only later, at a year-end meeting or in an email asking whether anything needs to change on the return.
The capital gains tax deadline after a separation
Illustration using made-up figures. A couple stopped living together in June 2024, partway through the 2024/25 tax year. One of them holds a buy-to-let portfolio bought for £310,000 and now worth £460,000, in their sole name. Under HMRC's helpsheet HS281, a transfer of that portfolio to the other spouse is no gain, no loss up to the end of the 2027/28 tax year, the third tax year after 2024/25. Before 6 April 2023 the same transfer had to happen within the 2024/25 tax year itself, or the gain crystallised.
The portfolio transfer
Illustration using made-up figures
Original cost, 2016£310,000
Value at the date of transfer£460,000
Gain, deferred rather than taxed, if transferred inside the window£150,000
Inside the window, the receiving spouse takes on the original £310,000 cost, and no capital gains tax is due at the point of transfer. Outside the window, with no formal agreement in place, the £150,000 gain is assessed on the paying spouse for the tax year of the transfer, at 18% or 24% depending on their income for that year, against an annual exempt amount of £3,000 (gov.uk, Capital Gains Tax rates). Once a formal divorce or separation agreement, a deed of separation, or a court order covers the transfer, HMRC's no-gain, no-loss treatment applies with no time limit at all, at any point after that agreement is signed.
Pension sharing orders differ between Scotland and England and Wales
A settlement can cover a pension as well as property and investments. Where it does, the court can order a pension sharing order, moving part of one spouse's pension rights into a new, separate pension for the other. The mechanism, and the paperwork behind it, changes at the border between the two legal systems.
England and Wales
A pension sharing order under section 24B of the Matrimonial Causes Act 1973, inserted by the Welfare Reform and Pensions Act 1999, moves a fixed percentage of one party's pension rights to the other. Where the court decides the finances, both parties complete Form E, a financial statement under the Family Procedure Rules 2010 that includes the cash equivalent transfer value of every pension held.
Scotland
A pension sharing order under section 8 of the Family Law (Scotland) Act 1985, also amended by the 1999 Act, can move a percentage or a fixed amount, a difference from England and Wales that follows Scots law's own approach to matrimonial property. Sheriff Court proceedings use Form F13A, a statement of both parties' assets and liabilities valued as at the date they stopped living together, under section 10(3) of the 1985 Act.
What moves
The pension credit created by the order becomes the receiving spouse's own pension, held separately from the pension it came out of. Each half is then accessed at the normal minimum pension age that applies to its own owner, currently 55, rising to 57 on 6 April 2028, regardless of either spouse's age at the time of the order.
A pension sharing order
Illustration using made-up figures. The couple's larger pension, a director's pension built up over the marriage, is worth £480,000. The other spouse holds a personal pension worth £40,000. The court orders a 30% share of the director's pension.
The pension credit is a separate pension from the day it is created. Figures illustrative.
The spouse who receives the £144,000 credit now holds a pension for the first time, or a much larger one than before. Where that money is invested, whether to add contributions against the £60,000 annual allowance for 2026/27 (gov.uk, Tax on your private pension contributions), and how it fits with any other pension or protection cover the client holds, are questions for the financial planner to work through with the client.
Where the accountant's file and the regulated advice divide
Accountancy work
Establishing the date a client stopped living together, checking it against the capital gains tax deadline in HS281, computing the gain on any transfer made outside that deadline, and recording a pension sharing order once the paperwork reaches the file.
Regulated advice
Deciding how a new pension credit is invested, whether to contribute further to it, and reviewing protection policies written on joint lives or naming an ex-spouse as beneficiary, which a settlement often leaves untouched.
An accountancy practice without the FCA permissions cannot give that advice, and in the Altro partnership the Equity & General financial planner does. The division between the two is set out in what the accountant does and what the financial planner does, and the steps that follow an introduction are in how it works.
The FCA's Financial Lives 2024 survey found that 8.6% of UK adults, and 13% of self-employed adults, had taken regulated financial advice in the previous twelve months. A client going through a separation is dividing pensions and property, and nobody may be looking at the two together. The wider picture is on the advice gap, and the current capital gains tax rates and reliefs for business owners are set out in capital gains tax in 2026/27 for business owners.
Two things to do this week
Record the exact date of separation. When a client mentions a separation, note the date they stopped living together in the file alongside the tax year it falls in. That single date sets the capital gains tax deadline for every asset they hold jointly or in one name.
Check protection cover written on the old household. A joint life policy, or one naming a spouse as beneficiary, does not update itself when a marriage ends. Where a client's file shows one, that is a reason to ask whether they would like a conversation with the financial planner about it.
Common questions
Can we tell a client their capital gains tax deadline is approaching?
Yes. Working out the date a client stopped living together with their spouse, and the tax year that date falls in, is accountancy work: it comes from the client's own account of events and sits alongside the other dates already in the file. Explaining that HMRC's no-gain, no-loss treatment for a transfer between separating spouses runs out at the end of the third tax year after separation, under HMRC's helpsheet HS281, is stating the rule as it is written. Deciding which asset to transfer, and whether to transfer it at all, is a decision for the client and their solicitor, informed by advice from the financial planner where investments or pensions are involved.
What is the capital gains tax deadline after a separation?
A transfer of an asset between spouses or civil partners who have separated is no gain, no loss up to the end of the third tax year after the tax year in which they stopped living together, under the rule that took effect on 6 April 2023 (HMRC helpsheet HS281). Before that date the window was only the tax year of separation itself. Once a formal divorce or separation agreement or a court order is in place, there is no deadline at all: the no-gain, no-loss treatment applies to a transfer made under that agreement at any point afterwards.
How is a pension sharing order different in Scotland?
In England and Wales, a pension sharing order under section 24B of the Matrimonial Causes Act 1973 moves a percentage of one party's pension rights to the other. In Scotland, a pension sharing order under section 8 of the Family Law (Scotland) Act 1985 can move either a percentage or a fixed amount, reflecting Scots law's separate approach to valuing matrimonial property as at the date the couple stopped living together. Financial disclosure also differs: courts in England and Wales use Form E, and the Sheriff Court in Scotland uses Form F13A.
Can the accountant say what a client should do with a pension credit?
No. Recording that a pension sharing order has taken effect, and that a new pension has appeared where none existed before, is something the accountant can see once the paperwork reaches the file. Where that new pension is invested, whether to add further contributions against the annual allowance, and how it fits alongside the client's income and any other pension pot are regulated advice questions for the Equity & General financial planner. An accountancy practice without FCA permissions cannot answer them, and should not try to.
Does a formal separation agreement change the capital gains tax deadline?
Yes. Once a transfer is made in accordance with a formal divorce or separation agreement, a deed of separation, or a court order, HMRC's no-gain, no-loss treatment applies with no time limit, under HMRC helpsheet HS281. The three-tax-year window only matters for a transfer made before that agreement exists. A couple who settle the paperwork quickly remove the deadline entirely. A couple still negotiating years after separation, with no agreement signed, are the ones whose accountant needs the date they stopped living together on file, and checked against the calendar.
Financial planning for your clients, alongside the accounts and tax work
Equity & General holds the FCA authorisation. There is no charge to your firm, and a named partnership director works with you from the first introduction.
