There are many tax reliefs available to married couples or civil partners. In many cases, these reliefs are only available if the couple / civil partners meet the legal definition of living together.

This definition of ‘living together’ is set out in the Income Tax Acts as follows:

Individuals who are married to, or are civil partners of, each other are treated for the purposes of the Income Tax Acts as living together unless:

(a) they are separated under an order of a court of competent jurisdiction;

(b) they are separated by deed of separation; or

(c) they are in fact separated in circumstances in which the separation is likely to be permanent.

It is important to understand that the three alternatives mentioned all require the spouses or civil partners to be separated, meaning their marriage or civil partnership must have broken down. However, if the couple are not living together but their marriage or partnership has not ended, they are still considered to be living together for Capital Gains Tax purposes.

HMRC’s internal manuals on the transfer of assets between spouses discusses this point when talking about a transfer of an asset. The transfer of an asset between spouses or between civil partners will be treated as transfer at no gain/no loss if they are living together.

The date of separation is crucial in determining whether an asset transferred between spouses or civil partners is considered to have been transferred at no gain or loss.