Not really news…. but maybe “News to you”
In this occasional series, we look at things that you might not know but knowing could save you (or someone you know) some money. As suggested in our
previous article on separation, we take a deeper look at couples and divorce.
Couples and Divorce – Part One
When a married couple divorce rather than just temporary separation, they need to take advice at the start.
We continue the (almost true) story of Barbara (or Barbie as her friends call her) and Kenneth (aka Ken). To remind you, Barbie owned a flat, just three doors down from their house that they bought when they got married , and Ken moved in to that flat on 5th April 2018.
In late April 2019 Barbie met a new gentleman. His name was Ryan – we forgot to mention that last time. And, Ken met a new lady. He would not say who but did say that Barbie knew her. We forget to mention that, too. Towards the end of 2019 they decided, having been married up to now, that “it wasn’t the real thing” and agreed to divorce.
Their
tax adviser had to think about boring tax stuff (but now maybe also early retirement). For the tax year 2017-18, no assets changed hands and we would argue that on 5 April 2018 they are definitely still living together even if Ken moved out in that tax year. 2018-19 was different, but when did they stop “living together”? Assets transferred during the year of separation qualify as tax free, even if that transfer follows the “not living together” moment.
What is the Year of Their Separation?
Here’s the crux: when they transferred assets on 7 April 2020, was it too late, being in the next tax year? If so, there may be some capital gains tax to pay. If separation became permanent during 2019-2020 there’s a tax problem looming.
In November 2019 they sat (Ken reluctantly so) at Barbie’s pink dressing table and Googled (which is now a verb) “Divorce”. There are quite a lot of financial things they agreed on, and they decide that until it’s over, whatever happens, Ken will move back to the marital home. Barbie will now move to the flat.
It was a bit of a palaver because they had to get their addresses and lots of other things, like driving licences and gym club membership changed. Fortunately they saved a heap on removal vans.
For three months they sent a lot of inappropriate Facebook messages to one-another about who should petition for divorce. Ken said he could easily “go for it” on grounds of unreasonable behaviour and would gladly declare Barbie’s obsession with collecting pink furniture having noticed it now fills their house!
Barbie could easily cite Ken for adultery with Barbie’s best friend, Teresa. It only happened once (she thinks) but for Barbie, it was more the principle and it was all Ken’s fault but she doesn’t want to sully Teresa’s impeccable reputation and after all they are still best friends? So, it’s decided, Ken petitions.
Finally, It’s Divorce O’Clock
Nothing much happens for a while due to public service cutbacks. In early April 2020 a decree nisi is granted. Ken is beginning to have second thoughts although they then swap the powerboat and Harley Davidson just after Barbie returns from a (power boating) holiday in the South Pacific, telling her girly friend (not the Teresa one) she wants to “wash that man right outta my hair”. So she applies to the court after 134 days because Ken is refusing to play the collectomania card. This takes us to late September 2020.
Things drag on for a long time and it gets pretty messy. Barbie is still pretty but Ken’s a mess. In April 2021 the (now somewhat more life like) Teresa knocks secretly on Ken’s pink front door and stops returning Barbie’s Facebook messages. In late June 2021 the decree absolute, weirdly, is granted.
Under the Settlement, Barbie agreed to transfer her interest in their home, to Ken. Barbie would keep the flat. As part of this deal, Ken had to transfer his valuable majority shareholding in a UK Plastics company, to Barbie. In the several months that then followed, Barbie sold her flat and then moved to Bali H’ai in the South Pacific to live forever with Ryan. Ryan developed a liking for Harley Davidsons but is not a friend of Ken. Finally, Ken couldn’t stomach pink wallpaper anymore and sold the house in late April 2022. He craved a new life with Teresa in a house with less furniture and just one mirror over the (anything but pink) dressing table.
Their tax adviser took early retirement when he could see the divorce (and the tax car crash) was imminent.
Next time, in part two, Maven will work out the tax situation on all of this for Barbie and Ken. Will it be pretty? Will they be in the pink?
