Emma Brown Tax Transactions Partner

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Emma Brown

Tax Transactions Partner

Emma leads our transaction tax team. She joined Wilson Wright in 2014 and became a partner in April 2019.

Emma has a depth of experience of advising entrepreneurs and owner-managed businesses and across a wide range of complex taxation matters relating to both personal and corporate tax. Her expertise includes of corporate reconstructions, M&A, EMI and EIS.

Her attention to detail and her ability to explain complex technical matters in a way that people understand, puts clients at ease. She delivers pragmatic commercial advice and ensures that clients’ best interests are preserved at all times.

Emma sits on the global tax committee of DFK International, reinforcing her strong international links on cross border transactions, and she was a finalist in the 2019 for a prestigious Tolley’s Taxation Award.

Emma is a member of Chartered Institute of Taxation and the EISA.

17 Aug 2022

In April 2022, the much awaited ‘no-fault divorce’ was introduced by the Divorce, Dissolution and Separation Act 2020. The new law allows a divorce with no blame being placed on either party and may be expected to increase the number of divorces.  There will be a change in the taxation rules, which will significantly lighten the burden on splitting couples.

Divorce in the UK is often preceded by a period of separation, the tax consequences of which are as follows:

Income Tax

Because married couples are taxed separately, a separation should not have any affect on the separated partners’ income tax position.

Capital Gains Tax

Any transfers of assets between spouses does not normally result in a Capital Gains Tax (“CGT”) liability. Under the legislation, the assets are deemed to be transferred at a value that is tax neutral (no gain/no loss). This treatment is restricted to spouses who have lived together at some point during the tax year in which the assets were transferred. If this condition cannot be met transfers of assets between spouses are deemed to have been made at market value.

Spouses are treated as living together unless:

• they are separated under a court order
• they are separated by deed of separation
• their separation is likely to be permanent.

In all of the above circumstances the no gain/no loss rule currently ceases to apply at the end of the tax year of de facto separation.

After that date any transfer of assets will be deemed to have been made between the separated spouses at market value because they will still be ‘connected persons’ until the date of divorce (final order).

Clogged loss rules apply to losses derived from the transfer of assets to a separated spouse during the period of separation. Clogged losses can only be set off against capital gains derived from the transfer of assets to the same individual while they remain connected, ie up until the final order.

Inheritance Tax

Transfers between spouses are exempt from inheritance tax (“IHT”), and this continues throughout the period of separation up until the final order. Special rules apply where one of the spouses is UK domiciled and the other is non-UK domiciled.

CGT Tax Reform from 6 April 2023

The Government is introducing draft legislation that contains two important capital gains tax changes that apply to separating and divorcing couples:

• The first key change is an extension of the period that the couple has to transfer chargeable assets to each other at no gain / no loss to the earlier of: (i) 5 April following the third anniversary of the date on which the couple ceases to live together; and (ii) the date on which the couple divorce, the marriage or civil partnership is dissolved or annulled, or they separate as part of a separation order.

• The second key change is to extend principal private residence “(PPR”) relief where one partner leaves the family home and the other continues to reside in the property. The departing spouse will be able to benefit from PPR relief where:

1. they dispose of their interest in the home to someone other than the remaining spouse / civil partner; or
2. they transfer their share of the home to the remaining spouse / civil partner in exchange for receiving proceeds on the eventual disposal of the home (i.e. the deferred proceeds will qualify for PPR relief).

Whilst both changes are expected to apply to disposals made on or after 6 April 2023, the separation can be earlier.