- Provide an explanation of the tax consequences of separation and divorce
- Advise what effect it will have on your limited company if your ex-spouse is a minority shareholder
- If required, carry out an impact assessment of liability on disposal of joint assets
- Carry out an examination of Capital Gains Tax elections for Principal Private Residence purposes
- Liaise with solicitors to provide financial information.
Scenario 1:
Capital Gains Tax implications
Although assets transferred between spouses are deemed to give rise to no gain/no loss there may still be a capital gain arising on the ultimate disposal of the asset.
Also, if a couple has been separated and living in separate houses for some time it is important to decide which is each’s principle private residence, and to make an appropriate election. This will avoid losing the valuable Capital Gains Tax exemption and creating an avoidable tax liability.
Understanding taxation matters can be complicated and time consuming - but it doesn’t have to be. Let the experts guide and advise you on the best way forward, giving you one less thing to worry about, at what is already a difficult time.
Scenario 2:
Is your partner a B shareholder?
If your partner is a B shareholder in your limited company, remember that most shares in a small limited company have the same voting rights and rights to dividends if they are of the same class or type. In short, this means that they are entitled to withdraw dividends from the company, so care should be taken to ensure that any dividend declarations reach the target shareholder.
It also requires a 75% vote in favour by shareholders to wind up a limited company. A close look needs to be taken at how any company is structured to ensure that the individual with the primary interest still has the freedom to act.
