Inheritance Tax and Divorce

Except in the rare cases where one spouse is domiciled in the UK and the other isn’t, there is a complete exemption on inheritance tax (IHT) between spouses. 

Transfers between spouses are generally not subject to IHT as there is ‘spouse exemption’. However, the amount of the spouse exemption is limited to just £325,000 in cases where the transferor spouse is domiciled in the UK, but the transferee spouse is not.  

The IHT exemption lasts as long as the marriage lasts, so up until the divorce has finalised. 

The tax implications of divorce can be complex and costly. You should carefully plan the division of your assets and seek specialist advice to minimise the tax burden of your separation. If you’re considering or going through a divorce, click below for a free initial consultation with one of our expert divorce solicitors. 

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Property adjustment orders in financial remedy proceedings for the transfer of real and personal property can be made effective only from the final order of divorce. However, HMRC accepts that transfers of money, property or other assets after the final order but pursuant to court orders made in divorce are exempt from IHT, if there is no intention to confer any gratuitous benefit on the transferee. 

This means that a certain amount of tax efficient estate planning is possible in the context of a divorce. 

Vardags’ team of top divorce lawyers delivers a bespoke legal service to HNW and UHNW individuals, their families, and businesses.