Taxation of Chargeable Gains Act 1992 section 225BA

Deferred payments on disposals in connection with divorce etc.

Section 225BA deals with how capital gains tax applies when a person receives a deferred payment from their former spouse or civil partner, representing a share of profit from the later sale of what was formerly the family home.

• Applies where an individual ("A") leaves the shared home (which was their main residence) and transfers their interest to their spouse or civil partner ("B") under a deferred sale agreement or court order linked to divorce or separation
• Where "A" later receives a share of the profit "B" makes on selling the property, that receipt is not treated as a separate disposal in its own right
• Instead, the deferred payment is treated as a gain arising from the original transfer of the home to "B", but the gain is treated as accruing to "A" only when the payment is actually received
• A "deferred sale agreement or order" is a divorce-related agreement or court order that includes a term entitling "A" to receive a share of any future profit "B" makes on the property