Tax on divorce settlement?

Islaboo

On divorce my settlement was money from the value of our shared house (no mortgage).

He managed to settle without selling the house from savings handing me nearly £90k to my bank account.

This was all done through the solicitor and documented etc.

Im now in the process of buying my own house for which im using the whole of this money as a deposit.

It suddenly occurred to me that this might be taxable. Its not an earning just assets split on divorce.

Could anyone tell me if im safe to put this money into my new house or if I should declare it on a self assessment.?

I was working up until last year (cross over of a couple of months working while having the money too) but im now a stay at home mum (dh works full time to support us) I pay tax on the interest I get from having it in my bank account.

Thanks in advance.

x

ceeforcat

It suddenly occurred to me that this might be taxable.

It is not - you have nothing to worry about. Indeed, given what else you have said, you should be in a position to claim tax that has been deducted from the interest.

Pennywise

It may be subject to capital gains tax, though highly unlikely.

You've effectively "sold" your house. So there's a capital gain of the "profit" between the proceeds and the original cost (adjusted for solicitors fees etc).

However, if you've lived in the house as your main residence throughout the period of ownership then you'll get main residence relief which makes the gain exempt.

So, you'll only end up with a CGT liability if you didn't live in it throughout the period of ownership, i.e. maybe you rented it out, or maybe you moved out of the marital home at least 3 years before the divorce was finalised.

So, as I say, highly unlikely, but it does depend on your circumstances.

Islaboo

Thanks for your replies,
The house was bought by my ex husband a year before i moved in.

I lived there 10 years with him, me mainly paying the bills but we didnt have a mortgage so the only part i contributed to was the large extension.

My divorce settlement was £90k which he paid £15k straight away (that went on rent when i moved out) the rest he has managed to get together the following year and pay me off without selling the house.

The original idea was the house would be sold when our youngest was 18 so not making him homeless and keeping somewhere for the kids to live with him too (we have equal shared responsibility of the 2 children) but he didnt need to do this in the end.

Im thinking that if its going towards my main residence it should be ok i hope but i dont want to go putting it down as a deposit and find i have a huge tax bill to pay.

The divorce was settled a year and a half after i moved out although like i say he paid part of it within 6 months.xx