“High income families will be pleased to see that many of the feared tax increases affecting the wealthy have not materialised. This is particularly the case for those going through a divorce or separation and the difficult financial discussions that come with the process.
However, the new private school VAT and removal of business rate relief on private schools will significantly increase school fees. Presumably many parties who were borderline (either in principle or for affordability reasons) will now elect for state education, thereby freeing up funds. But this change could also create animosity for separated parents if one of them wants to pull the child out of school to save money but the other refuses to do so. There may be an increase in ‘specific issue’ applications where separating parties are unable to agree what to do.
Meanwhile, the allowance for carers to rise to £10,000 could have a marginal effect in low-income cases, and the increase in minimum wage could have an impact in financial remedies in particular where one spouse is an employer of low-paid workers, e.g. in the social care sector.
Those who are unsure of how these changes will affect them would be wise to consult advice in order to figure out where they stand.”
Kiran Beeharry, Partner in the Family Team at SA Law, says:
“Separating couples will be breathing a sigh of relief as the transfer of the family home between spouses as part of a divorce remains Stamp Duty exempt. Given the overall cost of Stamp Duty, from a tax and cost efficiency point of view there will always be savings if one party can retain the family home, however this will depend on whether it is affordable to maintain and the release of other capital to the non-occupying spouse.
The changes to Capital Gains Tax mean that people will now have a bigger tax bill to pay and so divorcing spouses may need to reconsider the split of assets if settlements have not been reached and ahead of the implemented changes.
Businesses will now have a bigger employer NI contribution to make and unless this cost is passed on to consumers – which may increase costs and inflation – if it is absorbed then profits in turn will fall. For parties going through divorce and who have businesses, the underlying valuation of their business may be impacted by the increased cost of NI.”
