Splitting what you own during divorce or dissolution

Investments and savings will generally form part of your financial settlement on divorce or dissolution. Dividing them should be relatively straightforward if you can negotiate with each other. But you may need to value them and pay tax or charges if you sell or transfer them or cash them in. Find out what you can do.



How investments and savings are treated

In England, Wales or Northern Ireland : Investments and savings can be taken into account as part of your overall financial settlement. However, some assets, such as money or property you or your ex-partner (husband, wife or civil partner) inherited or owned before you married or entered into your civil partnership may not be treated the same as others.

In Scotland : Generally, only investments or savings you and your ex-partner have built up during the time you have been married or in a civil partnership are taken into account as ‘matrimonial property’. However, any increase in the value of investments or savings you or your ex-partner had before you got married or entered a civil partnership could be taken into account in some circumstances.

This can be a complicated area; if you are in any doubt, get professional advice. Find out who can help by reading Get professional help with divorce or separation.

Dividing savings accounts

The process of separating your savings may be different, depending on the type of account you have and whose name it’s in. You may have:

  • Cash ISAs : these can only be held in one person’s name (and not jointly). If you want to give your ex-partner money from your cash ISA you’d have to take out the money you want to give them. You couldn’t transfer the money from your own ISA directly to theirs.
  • Savings accounts : these are more straightforward and you could simply transfer some money from your account to your ex-partner’s. The only difficulty might be if the money is in a notice account. If that’s the case, you will have to ‘give notice’ and tell your bank or building society that you want to take out your money. If you don’t, you could lose some of the interest. If the money is in a fixed-rate savings account, you may not be able to cash it in before the term is up, or if you can, you may lose a substantial amount of interest.

Investment property

Once you know the outcome of your financial settlement, you will need to work out whether you want to sell, continue owning, or renting out investments such as a buy-to-let property or a holiday home. Contact your lender if you need to take your or your ex-partner’s name off the mortgage – and consider talking to a mortgage broker if you think you’ll need to remortgage.

Valuing your investments

You should be sent a statement every year telling you how much your investments are worth. However, this may not be same as the amount you would get if you cashed in or transferred your investments. Instead, depending on the type of investment, the value may be the:

  • Transfer value
  • Surrender value

Your first step should be to ask the investment company for an up-to-date valuation, or transfer or surrender value. You may have:

  • Stocks and shares ISAs
  • Unit trusts, investment trusts or OEICS (open ended investment companies)
  • Investment bonds
  • Bonds
  • With profits policies, such as an endowment

Understanding the costs of cashing in investments

Cashing in your investments may not be the best option, because you may have to pay tax and extra charges.

  • You may have to pay Capital Gains Tax (CGT) if you cash in or sell an investment and make a profit. You have an annual CGT allowance, which means you can make a certain amount of profit – once selling costs and fees are deducted – and not pay this tax.
  • You don’t have to pay CGT when you’re selling your main home or stocks and shares ISAs. This is a complicated area so it’s probably well worth getting advice from an independent financial adviser or accountant. You will have to pay for their advice.
  • Depending on the investment you have, you may have to pay charges if you sell or cash it in early. Even if you don’t, you may lose out if you sell share-based investments when the stock market is at a low level.

Transferring or selling shares you own

If you own shares you can either transfer them to your ex-partner or you can sell them so you can give them the money instead. It’s worth taking advice from an independent financial adviser or accountant about which is the best option.

  • You can transfer shares to your ex-partner by filling in and signing a ‘stock transfer form’ (otherwise known as a ‘J30’ form). You may be able to download this directly from the website of the company you own shares in.
  • If you have a stockbroker (or use an online stock broking firm), they can arrange to sell the shares for you. Make sure you find out how much this will cost. You may also be able to sell through a share-dealing service offered by the company whose shares you own. Not all companies offer this service.

Giving away assets when there’s no tax to pay

Normally, if you give away something like an investment that you have made a profit on above your Capital Gains Tax allowance, you would have to pay this. But you can transfer investments such as shares or investments, to your ex-partner during divorce or dissolution, without paying CGT. To qualify for this exemption you must do it in the tax year (from 6 April to 5 April the following year) that you separate.

Your next step

Find out about Maintenance for spouse or civil partner (in England, Wales and Northern Ireland) or Maintenance for spouse or civil partner in Scotland as part of your divorce or dissolution financial settlement.

Last reviewed: 15/10/2018

This content has been provided by the Money Advice Service