Jeremy Hunt’s Spring Budget 2024 has been announced today

Originally published on 6th March 2024 at 5:02 PM
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When you separate, you need to agree on how to divide your money, property, investments, and pensions, so it’s natural that changes in the economic climate will alter how you consider options and financial arrangements.

Below, we have noted some changes in the Spring Budget that you might need to consider as you make your agreements. If you’re not sure about any points or would like more guidance, you should seek expert financial or tax advice on these areas before concluding your divorce settlement.

Changes that impact the legal process and landscape:

1. Early legal advice pilot

The government is investing £12 million to expand Legal Aid, which provides early legal advice in family law proceedings for couples considering an application to the family court for child arrangements.

2. One stop shop

The government plans to introduce the ‘one stop shop’ tool to provide guidance and support for resolving disputes without going through court proceedings.

3. £170 million investment in the justice system

The government is committing £170 million to deliver a justice system "fit for the modern era". This includes £55 million for the Family Courts to offer online targeted guidance and earlier legal advice, shortening wait times and supporting families through non-court dispute resolution; and £15 million to introduce digital solutions, reducing administrative burdens in the courts.

4. Investment in a new system for Child Maintenance Service (CMS)

Committing £17 million to accelerate DWP’s digital transformation, replacing paper-based processes with simplified online services, such as a new system for the CMS.

Changes that impact practical considerations:

1. Capital gains tax allowance (CGT)

Capital Gains Tax (CGT) is the tax paid when you sell an asset such as company shares or a second home. The Chancellor announced a reduction in the higher rate of CGT for residential property from 28% to 24%. The lower rate remains at 18%, encouraging landlords and second-home owners to sell their properties to free up the market for buyers.

As part of your divorce, you may need or wish to sell assets impacted by CGT, in which case this change may impact your settlement. You should speak to a specialist tax advisor and ask them to calculate any tax that is likely to arise as a consequence of your divorce settlement.

2. Changes to child benefits

The government are announcing an expansion of childcare support and plan on addressing the unfairness for single-earner families by introducing the High Income Child Benefit Charge on a household rather than individual basis by April 2026. The government will also raise the High Income Child Benefit Charge threshold to £60,000.

Being pragmatic, and willing to compromise, will go a long way in helping you cope with the upcoming changes to the financial landscape and its impact on your financial arrangements. We know this is easier said than done, which is why we recommend a facilitated conversation.

Source: Spring Budget 2024 - GOV.UK

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