Blog

10/01/19
Where the Annual Allowance is exceeded, the tax liability will fall on the member.

For tax years up to 2010/11, the Annual Allowance charge was levied at 40% on the excess over and above the Annual Allowance. The amount charged is not income for tax purposes (although it is a charge to income tax). This means the member cannot set any allowances, losses or reliefs against the charge and it will not count as pension income.

From tax year 2011/12, any pension input in excess of the member’s reduced Annual Allowance of £40,000 (£50,000 for tax years 2011/12 to 2013/14) is treated as the top slice of the individual’s income and is taxed accordingly. This means that, effectively, there is no tax relief granted on any such excess input.

Any excess over the Annual Allowance is declared via the individual’s self-assessment tax return. It is not subject to National Insurance contributions.

The self-assessment tax return for an individual asks them to also fill in the relevant boxes of the ‘additional information’ pages if their contributions and pension inputs are more than the Annual Allowance. Notes on the self-assessment return Helpsheet 345 are designed to enable individuals to calculate accurately the total value of their annual pension savings and declare any chargeable excess.

Members of money purchase schemes will use their:
‘pensions savings statement’ (which should normally be received from the scheme administrator if their pension input amount for that pension scheme alone is more than the Annual Allowance, or the scheme administrator believes that they have flexibly accessed a money purchase arrangement and their ‘money purchase input’ amount for that pension scheme alone is more than the money purchase annual allowance), plus
pension input amounts relating to any other pension scheme arrangements they might have,
to quantify their annual pension savings for the tax year.

The self-assessment guidance notes include a simple guide to allow the majority of pension savers in defined benefit schemes to determine whether their savings fall within their allowance.

The reduction of the Annual Allowance to £40,000 from 6 April 2014, will have resulted in many more members of defined benefit schemes becoming subject to an Annual Allowance tax charge and, therefore, having to include the relevant details on their self-assessment tax return.

The introduction of the money purchase Annual Allowance of £10,000 from tax year 2015/16, reduced to £4,000 from 2017/18, has had a similar effect for members with money purchase benefits who have triggered this charge.

If the member does not have the information available to calculate the exact amount of their annual allowance charge, then they can estimate this. For example, the member might not be certain of the exact amount where part of the tax charge may be at 45% as it is uncertain how much of their income would be liable at the additional rate of tax.

When estimates are used, the member should make a note in the 'Any other information' part of their tax return to explain that an estimated figure has been used when calculating the amount of the annual allowance charge and when they expect the final figure to be available. The member will also need to tick the box to show that they have used estimated figures on their tax return.

Once the member has received the details that are needed to work out the annual allowance charge accurately, the member can amend their tax return if this is within 12 months of the statutory filing date. More information can be found in HMRC’s self-assessment manual
04/01/19
The Law Commission launched a public consultation on reforming the law of Wills. The consultation period closed in November 2017 so what has been happening since then? It seems that unfortunately the timetable for this project has slipped back as the Government has asked the Commission to consider the law relating to how and where couples can be married and so this new weddings project has been given priority.

As for the Wills reform, the Law Commission has yet to complete the analysis of the responses to the consultation, then to formulate the policy and prepare a final report. Following that the Commission will instruct parliamentary counsel to draft a bill that would give effect to their recommendations. In short, nothing much will happen anytime soon. However, it may be useful to set out the current position as far as this topic is concerned.

In England and Wales, the formalities for making a valid Will are governed by section 9 of the Wills Act 1837. It is well known that for a Will to be valid it must be in writing, signed by the testator in the presence of two witnesses and signed by the witnesses themselves. In the consultation document the Law Commission clearly stated that they do not propose fundamental change in this area.

It is very clear from the legislation that a Will needs to be a paper document. Indeed, given that the law originates from 19th century it couldn’t be anything else. However, as mentioned above, the Law Commission has specifically considered how the ability to make a Will electronically could make it easier and indeed promote making Wills by individuals.

There is no doubt that if someone was simply able to make a “quick Will online" the process would be significantly simplified and obviously much cheaper. On the other hand of course, as with all things electronic, there is the potential risk of fraud and exploitation.

While electronic signatures are fully legal in the UK and becoming more accepted in commercial transactions, by definition in such transactions, given that two parties are involved, each party would be interested in ensuring the authenticity of the other party’s signature. The "ensuring of the authenticity of the signature" is in fact the key issue in this e-Wills dilemma. As the Law Commission has pointed out, in order to make electronic Wills a reality, it will first have to be determined what constitutes a secure form of electronic signature and there will have to be a suitable infrastructure to ensure that a durable record of an electronic Will remains available many years after the Will has been executed.

In order to strike a balance between enthusiasm for electronic Wills on the one hand and the need to work out the detail of how they could be securely introduced on the other, the Law Commission provisionally proposed the creation of a statutory power enabling the introduction of electronic Wills that provide sufficient protection for testators against the risk of fraud and undue influence.

Until the law is clarified in this area (which will require a separate piece of legislation) the Law Commission has confirmed that electronic signatures will not satisfy the current formalities for a valid Will.
20/12/18
A company can claim relief for a loss, for example, from trading, the sale or disposal of a capital asset, and on property letting, provided that company would normally be liable to pay corporation tax. Relief is obtained by offsetting the loss against other gains or profits in the same accounting period, or a claim can be made to carry the loss back. Any remaining loss will be carried forward to future accounting periods. There have been a number of changes to loss relief, most recently in the Autumn Budget.

Corporate capital loss restriction
Companies are charged corporation tax on their chargeable gains, not capital gains tax and there are some differences between the rules for calculating chargeable gains and allowable losses for companies, compared with individuals and trustees, etc.

And losses made when a company sells or disposes of a capital asset, are treated differently from trading losses.

Capital losses arising to a company in an accounting period are set against any capital gains arising in the same period. When capital gains exceed capital losses in an accounting period, the company will have chargeable gains that are subject to corporation tax. Remaining capital losses can be carried forward and set against capital gains (but not income profits) arising in future years.

Companies within a group for capital gains purposes can elect to transfer gains or losses arising in an accounting period to another company within that group.

Major reforms were introduced to corporation tax income losses from 1 April 2017:
• Losses arising from 1 April 2017 can in most cases be carried forward and set against the total profits of a company or another company within the same group; and
• From 1 April 2017, the amount of profit that can be relieved by carried forward losses is limited to 50%, subject to an annual deductions allowance of £5 million per group.

As the April 2017 reforms didn’t cover capital losses, the Government has now published a new consultation to remedy this.

The loss relief rules for income already benefit capital gains by allowing certain carried-forward income losses to be set off against capital gains. And the rules for capital losses already ensure a form of group relief for carried-forward losses and allow carried-forward capital losses to be set against any kind of gains.

However, the Government believes that the absence of any restriction on the amount of capital gains that can be relieved by carried-forward capital losses can have undesirable outcomes for the Exchequer, as businesses making substantial capital gains over many years may not pay any corporation tax due to losses incurred from historic disposals.

So, in order to address this, it has been proposed that the amount of capital gains that can be relieved by carried-forward capital losses will be limited to 50% from 1 April 2020.

The Government intends that the reforms to capital losses will apply to capital gains that arise on or after 1 April 2020 such that the restriction will apply to losses carried-forward from the last accounting period ending before that date.

Where a company has an accounting period that straddles 1 April 2020, it is proposed that the accounting period be split into two, one period ended on 31 March 2020, the other commencing 1 April 2020. The restriction will apply only to gains arising in the notional period from 1 April 2020.

As companies are chargeable to corporation tax on the net amount of gains and losses arising in an accounting period less losses carried-forward from earlier periods, the net amount of gains will need to be established for each notional period. Net gains arising in the notional period ended 31 March 2020 can be offset by carried-forward capital losses without restriction; net gains arising in the notional period commencing on 1 April 2020 will be subject to the restriction.

Where there is a surplus of capital losses arising in the notional period ended 31 March 2020, these are set against capital gains of the later notional period in arriving at the net gains in that period before the restriction is applied.

However, as the allowance of £5 million per group that was introduced for carried-forward income loss relief will also cover capital gains that can be offset with carried-forward capital losses, the Government estimates that fewer than 1% of companies will be financially affected by the restriction due to the availability of a £5 million annual allowance.

The consultation considers how best to achieve this reform in legislation and how to deal with the interactions with other areas of the corporate tax system, including the April 2017 reforms to corporate income loss relief.

The closing date for comments is 25 January 2019. Draft legislation will then be published in Summer 2019, allowing a period of technical consultation ahead of its inclusion in the 2020 Finance Bill.

In the meantime, an anti-forestalling measure has been put in place. It applies for disposals on and after 29 October 2018 to prevent:
1. Delaying the realisation of a capital loss so that it will not accrue until a later accounting period;
2. Making arrangements that will enable an existing capital loss to be refreshed after this reform comes into force thus converting a carried-forward capital loss into an in-year capital loss which would not be subject to the loss restriction;
3. Ensuring that any capital gains are recognised before the loss restriction comes into force.

In the first two scenarios, any tax advantage obtained because the loss restriction has been avoided could only be realised after the commencement of the new rules, even though the relevant arrangements could be entered into prior to that date. So, the Government intends to include relevant anti-avoidance rules to negate any tax advantage from arrangements entered into before the introduction of the restriction, but which give rise to such a tax advantage after.

The Government has said it will counter arrangements that seek to exploit the deductions allowance going forward, such as where there is manipulation of a group structure to maximise the amount of the annual allowance due.

In the third scenario described above, a company (possibly within a group) could either make a disposal or set a time of disposal such that a capital gain on an asset will artificially accrue before this loss restriction comes into force. This may involve the use of losses that are already carried-forward or the use of current period losses that would be restricted as being carried-forward under this reform.

The period between the consultation being announced and 1 April 2020 will be subject to an anti-avoidance rule. Any tax advantage claimed can be denied where arrangements are contrived specifically to avoid the effect of a loss-restriction after the changes have been announced, but before they come into force. The Government has however said that it does not intend this to affect capital gains arising under normal commercial practice during this period.

Amendments to relief for carried-forward income losses
In July this year HMRC has said it would introduce amendments in the 2018/2019 Finance Bill to correct defects in its April 2017 reforms (see above) to carry forward loss relief for companies and to ensure that the legislation works as intended.

Amendments include:
1. The deductions allowance that can be used by a company that is a member of a group is restricted so that where that company is a member of one group and an ‘ultimate parent’ of another, it can only use a share of the allowance from the group of which it is a member.
2. This applies in relation to accounting periods beginning on or after 6 July 2018 (and to amounts falling after 6 July 2018 where an accounting period straddles 6 July 2018) and will prevent groups from acquiring new members to boost the amount of the deductions allowance available.
3. The terminal loss relief rules have been amended to ensure that where the three-year timeframe for which relief is due starts part way through an accounting period, the total relief due for that accounting period is restricted to the proportion of the total profits for the accounting period that falls within that three-year timeframe.

This will apply to accounting periods beginning on or after 1 April 2019.

Various amendments have also been made to tighten up the April 2017 extension to the anti-avoidance provisions around where there is a transfer of a trade under common ownership (sometimes known as a hive down).

It was confirmed in the Autumn Budget that these changes would go ahead.

The draft legislation published on 6 July 2018 has also been amended to include changes to the group relief cap on profits. The amendments limit the amount of profits against which group relief for carried-forward losses may, in certain circumstances, be allowed to the “qualifying profits” (instead of “relevant profits”) where these are less than the amount of the deductions allowance. New sections introduce the definition of “qualifying profits” for this purpose. The changes to the group relief cap apply from 1 April 2017.

Where a company has an accounting period that straddles 1 April 2017, the periods falling before and after that date are treated as separate accounting periods for the purposes of applying the restrictions to corporate income loss relief.

HMRC has now published amended guidance looking mainly at how profits, losses and deductions of the straddling accounting period can be apportioned in order to determine how much of these amounts fall before and after 1 April 2017.

Additional rules apply to companies affected by the corporate interest restriction (CIR) and where both sets of provisions require apportionments to be made, HMRC says that it expects consistency. Details can be found in HMRC’s corporation tax manuals at CTM04890.

The CIR rules, which have also applied since 1 April 2017, restrict the ability of large businesses to reduce their taxable profits through excessive UK interest expense. Changes are also being made to this legislation, to try to ensure that the rules operate as intended. For general guidance on the corporate interest restriction, see CFM95000.
Author: Technical Connections
14/12/18
This is an interesting “contextual” extract from the first part of the OTS report on the simplification of inheritance tax (IHT).

IHT: some facts
How many people pay IHT?
Each year, fewer than 25,000 estates in the UK are liable for IHT. This is less than 5% of all deaths. The number of liable estates has increased every year since the 2009/10 tax year. This is partly because of the freeze of the nil rate band (NRB) and partly due to increasing estate values. Much of the increase in estate values is due to increased residential property values.

How many people fill out IHT forms?
In the UK, on average, around 570,000 people die each year. IHT forms were completed for 275,000 estates in the UK in the 2015/16 tax year, over ten times the number of estates on which any IHT was paid. This means that an IHT form was submitted for around half of all the deaths in that year. The forms need to be submitted because the value of the estate must be reported to HMRC, even where there is no tax liability.

How much does it raise?
IHT makes up less than 1% of the total tax raised by the Exchequer. Receipts totalled £5.2 billion in the 2017/18 tax year. To put this into context, this would cover just over one week’s worth of the cost of providing UK pensions and welfare benefits that year. IHT receipts have been steadily increasing. In the 2009/10 tax year receipts were £2.38 billion, and whilst the increase is forecast to continue, it is expected to slow as the residence NRB takes full effect. The tax gap for IHT (the difference between the IHT that should be paid and the IHT actually paid) is estimated at around £600 million per year. This is relatively high, as a percentage of the total IHT due, compared with other taxes.
10/12/18
Investment trusts, unlike collective funds such as unit trusts and open-ended investment companies, spend far less on marketing and, as such, are often overlooked. Here are five advantages worth thinking about:
• Although charges on all funds are slowly coming down, investment trusts tend to levy lower fees than unit trusts and open-ended investment companies.
• Some investment trusts appeal to income-seekers because they are able to grow dividends.
• Trusts are, arguably, better equipped to increase dividends than unit trusts or open-ended investment companies because they are allowed to hold back some income they receive from holdings
• unlike rival funds they can borrow money to increase exposure to markets. This can work in favour of shareholders if subsequent equity gains surpass the cost of borrowing.
• The average investment trust has outperformed its unit trust counterpart over one, three, five, ten and 15 years.
23/11/18
In 2010, the Government announced that it would remove child benefit for high income households. In the Government’s view such a household would be one where one of the partners has income of more than £50,000 and this is reflected in the legislation.

Child benefit is currently worth £1,076 per year for the first child and £712 for each subsequent child.

Where income of one of the claimants exceeds £50,000 there is a tax charge equal to 1% of the amount of child benefit for each £100 of income between £50,000 and £60,000. Child benefit is therefore tapered away until, when income hits £60,000, it is lost completely.

This has led to many partners who stay at home and don’t work not bothering to register for child benefit. After all, what is the point of claiming a benefit that has to all be subsequently paid back because the other partner has income of more than £60,000?

For those parents who officially opt out of receiving child benefit but still register, they can still continue to receive a credit towards their State pension entitlement. However, for those who simply do not claim child benefit this may cause them to lose entitlement to part of their State pension.

Such people should, if they are responsible for a child under age 12, still fill in the claim form and tick the opt-out box to make sure they get their National Insurance credits which will count towards their State pension entitlement. These credits are particularly vital for stay-at-home parents who are unlikely to be contributing to any other type of pension.

Clearly this is a bit of a trap for couples where one stays at home and looks after the children and the other is out at work with an income of more than £60,000. The “at-home” parent should still register for child benefit – even though none will be paid.
19/11/18
More people are selling second-hand properties. This could give rise to substantial CGT liabilities. How are those CGT liabilities calculated? Advance planning can reduce those CGT liabilities.

It would seem that some of the tax measures announced by George Osborne in his Budget in 2015 are beginning to take effect. More and more people are selling their buy-to-let investments. This naturally leads into considerations on potential capital gains tax (CGT) liabilities.

Capital gains tax is payable on the profit made from the sale of property that is not the taxpayer’s principal private residence, as well as assets such as shares (that are not held inside a pension or ISA).

Whilst no CGT is payable on the profits arising on the sale of a private residence, CGT is a reality on the sale of a buy-to-let property. After deduction of the CGT annual exempt amount, tax will be payable on the gain at 18% (to the extent it falls within the investor’s basic rate tax band) and 28% (to the extent it takes him or her into higher rate tax). It should be noted that the top rate of CGT on residential property is therefore 28% - even for 45% income tax payers.

And we can expect that HMRC is taking a keen interest in these transactions.

It has been reported that HMRC is apparently cracking down on those who sell a second home or buy-to-let property but fail to pay tax on the profits.

In this regard, apparently HMRC is to write to 1,500 people it has identified as having sold a property in the 2015/16 tax year but not declared a profit on which capital gains tax would potentially be payable. The letter will ask recipients to explain why they have not declared the gain and paid any tax. Failure to respond to the letter or provide an adequate explanation could result in a formal investigation and fines.

As mentioned earlier there has been an increase in sales of buy-to-let properties after a series of tax changes, that began to come into force in April 2016, reduced their attraction to investors.

The question is, is there any way in which the CGT tax bill can be reduced?

The tax is levied on the capital gain that arises on disposal – this is the difference between the purchase price of the property and the price at which it is sold.

Each individual has an annual capital gains tax exemption of £11,700 in 2018/19. This is £23,400 per couple where the property is in joint ownership. This, of course, is an investor’s total annual exemption and so, if the investor also has taxable capital gains elsewhere, these will count towards it. Losses from, say, the sale of shares or another property can be offset against gains.

Furthermore, the investor can deduct from the gross gain any costs incurred in the process of buying and selling the property, such as legal fees, agents’ fees and SDLT. It is also possible to deduct the cost of improvements, such as a kitchen extension or putting in a new bathroom.

It is not possible to deduct mortgage interest, repair costs or the cost of replacing items, (known as running repairs). However, in the case of buy-to-let properties, such costs will typically have been claimed against income in the year they were incurred. Matters can get complicated if an item is replaced with one of a higher specification, (in which case part of the cost can be offset against income and the other part against any gain.)

If a property has been the principal private residence of the investor for part but not all of the time it has been owned by the investor, in principle, CGT will only be charged on the pro rata gain for the period during which the property was not the investor’s principal private residence. It is also possible to claim an exemption for the last 18 months of ownership whether the property was occupied or not.

If a property that has been occupied as a private residence has been let out, it is possible to make use of lettings relief, which will reduce the gain by £40,000 — or the amount of the gain that is chargeable, whichever is lower. For investors who have more than one home that they have used as a private residence, they can nominate which will qualify for principal private residence relief. It does not have to be the one where they have lived most of the time.

Generally, it would make sense to nominate the one expected to make the largest gain when the property is sold. The problem here is that the investor needs to act quickly as they only have two years from when a new home is bought to make the nomination.

Unmarried couples can each nominate a different home as their main residence and therefore benefit from two “principal private residence” exemptions. This does not apply to married couples or civil partners.

When is the tax due?
The deadline for paying CGT is the last day of January after the end of the tax year in which the taxpayer realises the gain. For example, if the taxpayer sold a property on 1 August 2017 (in the 2017/18 tax year) the deadline to pay the tax due would be 31 January 2019.

There are plans to change the rules to require tax to be declared and some paid on account on such properties within 30 days of sale. This is expected to come into force on 6 April 2020.

Example - Frank
Frank bought a house on 1 February 2006, for £120,000, lived there until 31 July 2010, and let it until it was sold on 31 January 2018 for £260,000. He will have made a profit of £140,000 over the 12 years he owned it.

He is entitled to the principal private residence (PPR) relief for the time it was his main residence — in this case, the initial 54 months. A further relief is available for the final 18 months before it was sold, allowing him to claim PPR relief for 72 of the 144 months of ownership.

Deducting £70,000 from the total gain of £140,000 (72/144ths) leaves £70,000 that is subject to capital gains tax (CGT) — assuming no other capital expenditure that could be used to reduce the gain further.

Because Frank had let the house, a further £40,000 letting relief can then be deducted, reducing the gain to £30,000. From this he can deduct the annual CGT exemption in the tax year the property was sold — £11,300 in this case — pushing the taxable gain down to £18,700.

If he were a higher or additional rate taxpayer, Frank would pay 28% tax, giving a bill of £5,236. If the gain kept Frank in basic rate tax, he would pay 18% or £3,366.
16/11/18
An increasing number of workplace pension schemes are coming under greater scrutiny from The Pensions Regulator (TPR) as part of a significant shift in its approach to protect savers.

To reflect major changes in the political, economic and pensions landscape, TPR will be working proactively with more pension schemes through a new range of interventions to address risks sooner, clearly set out its expectations and take action where necessary.

The changes result from TPR’s major review of the way it does regulation, which is now transforming how the organisation works to safeguard member benefits. Key to the new approach is the introduction of a supervision regime to monitor schemes more closely, which will include higher and lower intensity interventions depending on the risks identified.

Chief Executive Lesley Titcomb said: “Following a complete review of our entire approach to regulation, we are now implementing a radical shake-up of the way we regulate to embed our pledge to be clearer, quicker and tougher.

“Schemes across all sectors, whatever their size, can expect the volume and frequency of their interactions with us to increase so that potential risks to pension savers are identified early and put right before it becomes necessary for us to use the full force of our enforcement powers.”

“Our new model is flexible – we will take a systematic approach to set out our expectations and will respond swiftly to emerging risks, taking tough action where necessary to tackle bad behaviour, including by corporate entities.”

“An important element of our new approach will be the use of a broader range of communication channels to drive behavioural change by promoting greater understanding of what schemes need to do in order to comply with the law and demonstrate high standards. This was a vital ingredient in the success of automatic enrolment amongst employers and we look forward to developing a closer relationship with schemes, both large and small.”

Dedicated, one-to-one supervision will be introduced for 25 of the biggest defined contribution (DC), defined benefit (DB) and public service pension schemes from next month, with this approach being rolled out to more than 60 schemes over the next year.

TPR will maintain ongoing contact with these schemes and in some cases their sponsoring employers, reflecting their size and strategic importance within the pensions landscape.

In addition to one-to-one contact, higher volume supervisory approaches are also being introduced from next month to address risks and influence behaviours in a broader group of schemes.

This second type of intervention will be piloted with approximately 50 DB schemes to assess compliance with messages in TPR’s 2018 annual funding statement, specifically concerning whether schemes are being treated fairly when it comes to dividend payments to shareholders. Hundreds of schemes are expected to experience higher volume supervisory approaches over time to tackle different risks across the pensions landscape.
16/11/18
An expected ban on lucrative “no transfer, no fee” incentives paid to pensions advisers will not happen until next year at the earliest after the financial regulator said it needed more time before making a ruling. Currently, anyone looking to transfer a defined benefit fund to a personal pension must seek advice from a regulated adviser if their fund is valued at more than £30,000. The adviser either levies an upfront fee or enables the client to pay from their pension fund if they choose to go ahead with the transfer. This year The FCA said that contingent charging, in which advisers are paid only when they persuade savers to move out of final-salary company schemes, was potentially harmful to customers. On Thursday it said that it had sought views and because of comments needed to carry out more work. Any proposals to change the rules will be consulted on “in the first half of 2019”.
14/11/18
A new consultation has been published by the Ministry of Justice looking at radically overhauling the legal requirements for divorce in England & Wales. The consultation is running until 10th December 2018.

There is currently a Bill before Parliament looking at the financial provision within divorce and together with the recent high profile case of Owens v Owens it has highlighted the outdated nature of the legal process on divorce.

The current law in England and Wales – which has remained unchanged for fifty years –sets requirements which can themselves introduce or aggravate conflict, and which encourage a focus on the past, rather than on making arrangements for the future.

The Government believes there is now broad consensus that the current divorce process does not serve the needs of a modern society. Difficulties with the current law have also been highlighted recently before the Supreme Court. In particular, the current divorce process is complicit in exposing children to the damaging impact of ongoing adult conflict during, and too often after, the process. While the wider family justice system is focused on helping people to resolve family issues in a non-confrontational way, the legal divorce process can make this more difficult because of the way it incentivises the attribution of what is perceived as blame. Parents in particular, who need to continue to work together in their children’s bests interests, may struggle to overcome feelings of hostility and bitterness caused by the use of “fault” to satisfy a legal process.

Under the current requirements, couples must either live apart for a substantial period of time before a divorce can be obtained, or else one spouse must make allegations about the other spouse’s conduct. This is sometimes perceived as showing that the other spouse is “at fault”. Three out of five people who seek divorce make allegations about the other spouse’s conduct. Both routes can cause further stress and upset for the divorcing couple, to the detriment of outcomes for them and any children. There have been wide calls to reform the law to address these concerns, often framed as removing the concept of “fault”.

Marriage is a solemn commitment, and the process of divorce should reflect the seriousness of the decision to end a marriage. The Government believes that the law should not exacerbate conflict and stress at what is already a difficult time. The Government accepts the principle that it is not in the interests of children, families and society to require people to justify their decision to divorce to the court.

The proposals
The divorce process would retain irretrievable breakdown as the sole ground for divorce but remove the current requirement for the petitioner to give evidence of conduct or separation. Instead, one or potentially both parties will petition the court with a notice of the intention to divorce. The court will no longer need to check the particulars of the evidence but will continue to check other evidential aspects of the notice to the court (for example, to make certain that the court has the jurisdiction to act, that there is a valid marriage to dissolve, and to guard against fraudulent petitions).

The court will then be able to grant a provisional decree of divorce (the decree nisi) if these other requirements are satisfied and, following an application by either party after a statutory period of time has elapsed, may ask the court to make the divorce final by granting the decree absolute, as under the current law.

The two stage process (decree nisi and decree absolute) it is proposed remains but with a change to the minimum time frame between the issue of both decrees. There is currently a minimum time frame of 6 weeks and a day between the two decrees. There are arguments for the time frame to be extended but with potentially a shorter timeframe for specific circumstances.

Another proposal is to remove the right to contest the divorce. The case of Owens v Owens is exceptional, but it does illustrate the difficult position of one spouse who, it is reported, feels legally trapped in a marriage she regards as over.

The Government believes that as a general rule it serves no purpose – whether to the parties or to the state – to keep the opportunity to contest the divorce. Most divorce petitions in practice support a one-sided account that may not reflect the real reason for the breakdown of the marriage. Few respondents want to spend time and money on contesting the particulars in the petition, especially if they agree that the marriage is over. If one party has decided that the marriage is over then, arguably, the marriage is at an end. A marriage benefits the family and society only where each party is committed to the other. Any other marriage is a marriage in name only, the “empty legal shell” in the words of the Law Commission over fifty years ago.

The responses to the consultation will be published in March 2019 and it will be interesting to see if the Financial Provisions bill is also incorporated into the reform.