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What are we each entitled to in our divorce settlement?

What does the law say about how to split the house, how to share pensions and other assets, and how much maintenance is payable.

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tax and spousal maintenance

  • fio
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27 Sep 07 #4038 by fio
Topic started by fio
Could anybody tell me what the tax situation is with spousal maintenance? Is it counted as taxable income? I am assuming that X has already paid tax on his earnings, or would he get some sort of tax relief on the maintenance?
I would be interested to know
Thanks for reading

  • DownButNotOut
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27 Sep 07 #4043 by DownButNotOut
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I believe that the person paying spousal maintenance can deduct it from their gross salary.
(i.e. they do not pay tax on it).

The person receiving it has to declare it as part of their income and pay tax (if applicable) on it.

  • LittleMrMike
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27 Sep 07 #4044 by LittleMrMike
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Sorry, friend, but I don't think you're right. You cannot get any tax relief on maintenance payments at all and the recipient pays no tax.

In other words, the system still assumes the payer has the money, and taxes him on it, even though he ( it usually is a he ! ) is under a binding obligation to pay part of it to his ex. That can mean, and does in my case, that I am deemed to have an income too high for age related tax reliefs even though the amount I am actually left with after paying the maintenance is such that I would be entitled to the higher tax allowances. Typical Treasury con trick.

Mike

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27 Sep 07 #4051 by fio
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So it looks like the money is taxed at source then, but does anybody know what happens if I then get a part time job which pays under the tax threshold, would the SM be counted as earnings then? This is all academic at the moment as we are both out of work, but just in case I feel I should know where I will be standing and I want to do it right.
Does he get taxed as single or married?

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27 Sep 07 #4052 by fio
Reply from fio
So it looks like the money is taxed at source then, but does anybody know what happens if I then get a part time job which pays under the tax threshold, would the SM be counted as earnings then? This is all academic at the moment as we are both out of work, but just in case I feel I should know where I will be standing and I want to do it right.
Does he get taxed as single or married?

  • mike62
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27 Sep 07 #4055 by mike62
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He is taxed as married until the divorce is completed. But the tax break for being married is soooooo pitiful, it makes very little difference.

I would think that Spousal Maintenance counts as income, for benfits purposes (most other things do!), but I don't know for sure.

Mike

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27 Sep 07 #4062 by Vail
Reply from Vail
Hi All,

CSA payments count towards benefits. Spousal maintenance is only tax deductable if you were divorced before Mrs. Simpson (sorry, I can't remember but in might be 1935).

SM does not count as taxable income for the recipient unless it comes direct from an untaxed or partially taxed source - please don't go there - as there is a principle to avoid double taxation which Gorgeous Gordon hasn't got around to destroying.

Mike, if you employed a carer .........

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