Separation - tax implications

John_Rogerson

Hello,

My spouse and I are currently separating, no children involved, no property.

I will be paying her monthly maintenance payments for a fixed period under a separation agreement we are drawing up between our respective solicitors. Does that constitute a legally enforceable maintenance arrangement, or is that considered a voluntary arrangement. And summing up, bearing in mind there is a tax credit for maintenance payments, is it better for me to stay on joint assessment for tax purposes, or be taxed as a single person? Are there any other implications for a future divorce?

Thanks

gerrybbadd

John_Rogerson wrote: »

Hello,

My spouse and I are currently separating, no children involved, no property.

I will be paying her monthly maintenance payments for a fixed period under a separation agreement we are drawing up between our respective solicitors. Does that constitute a legally enforceable maintenance arrangement, or is that considered a voluntary arrangement. And summing up, bearing in mind there is a tax credit for maintenance payments, is it better for me to stay on joint assessment for tax purposes, or be taxed as a single person? Are there any other implications for a future divorce?

Thanks

It's not legally enforced, if it is agreed between solicitors.

Although separating, you can elect to remain joint assessed for tax purposes, if you both agree to it, and it is advantageous.

Tax credit is only available for maintenance payments if legally enforced.

If divorced, you both become single for tax purposes again, and there is no scope for joint assessment anymore

exaisle

gerrybbadd wrote: »

It's not legally enforced, if it is agreed between solicitors.
<snip>
Tax credit is only available for maintenance payments if legally enforced.

I disagree...

It qualifies for tax credit if it's "legally enforceable", not "legally enforced". This means that if it's a formal contract, properly signed and witnessed and (most importantly) one side can sue the other to "legally enforce" them to comply with the terms of the contract.

What revenue are getting at here is that informal or simply verbal agreements to pay maintenance don't qualify.

John_Rogerson

OK thanks for the replies guys. Very helpful.

It's fairly amicable so I suppose the question to weigh up is whether each of us individually would be better off financially under joint or single assessment.

exaisle

General rule of thumb is that you can never be worse off under joint assessment...