Readers’ forum: Property proceeds paid on divorce settlement

A property is jointly owned by Mr A and Mrs A. When they divorced the court awarded the house entirely to Mrs A but as part of the divorce settlement the court agreed that a property charge should be applied which entitled Mr A to 40% of the market value when the property is sold.

Mrs A has decided that she does not want to sell the property and would like to remove the property charge by settling the amount owed to Mr A based on the current market valuation. In these circumstances is the payment to Mr A subject to capital gains tax because the property has not actually been sold? And if it is not subject to capital gains tax how would this be declared in Mr A’s self assessment if at all?

I would be grateful for some assistance from readers.

Query 19...