As above Peter Grimley
In short-yesThe term 'asssociate' in s417 incorporates the s.839 defintion of 'connected', which in turn includes the term 'wife or husband'.
Thus for all associated company purposes husbands and wives are connected persons, and for IHT the interspousal exemption applies even to couples who are legally separated.
It is even suggested that for IR35 purposes an indivdual may effectively be treated as the associate of a separated spouse and simultaneously of a cohabiting partner. Under the new Civil partnership rules this becomes even more complex.
The only places where separation changes the usual rules for married couples is in relation to transfers between husbands and wives-although the connected party rules continue to apply- where in the tax years following separation transactions can give rise to chargeable gains. Even here there remains an assymetry, as the connected party rules will continue to apply to deny losses on such transactions, known as clogged losses.