Avoiding the blame game – should I wait for no-fault divorce?

No-fault divorce will come into effect on 6 April 2022, making sweeping reforms to how couples can legally end their marriage or civil partnership. For many couples, no-fault divorce will offer them a simpler and more amicable way to separate, but it is not the best route for everyone:

Minimising blame

The main benefit of waiting for the change in the law is that a couple will be able to apply for a divorce jointly, without either person having to blame the other. This may help them to remain on amicable terms, which can in turn make it easier to discuss arrangements for the children, or how to divide their finances. That being said, many couples achieve this within the current divorce law.

Timescales

The no-fault divorce procedure has in-built delays, to encourage couples to spend more time reflecting on whether they really want to get divorced. These built-in delays mean that the absolute minimum time it will take to obtain a divorce will be six months from submitting the application. It may, therefore, take longer to obtain a no-fault divorce than it would under the current system.

Tax

Delaying a divorce to the start of the new tax year can have significant tax implications (particularly for capital gains tax – ‘CGT’). Transfers of assets as part of the financial settlement between divorcing spouses or civil partners during the tax year of permanent separation are not subject to CGT. Transfers in the following tax year will be subject to tax and this can lead to hefty and unexpected tax bills to manage on top of everything else. A couple who separate and start divorce proceedings now have only until 5 April this year to reach a settlement and make the asset transfers. If they separate and start proceedings on 6 April 2022, they have until 5 April 2023 to sort things out without triggering tax liabilities (although couples who have already permanently separated cannot take advantage of this).

Contesting the divorce

Under the current law, one partner can ‘contest’ the other’s application for a divorce, and argue that they should not be divorced. If this happens, under the current rules this could lead to costly and stressful court proceedings. Once no-fault divorce comes into effect, parties will be able to apply for a divorce and not have to worry about it being contested, which in turn, may save them time and money. However, most divorces take place without any problems and only a very small percentage are contested.

For more information about no-fault divorce, click here.