U3. Divorce

INCOME TAX

Maintenance payments by UK resident individual

- Excluded from charge as annual payments under ITTOIA s.727.

Maintenance payments by non-UK resident individual

-A maintenance payment arising outside the UK is exempt under s.730.

- Maintenance payment means (s.730):

(1) Payment under a court order or written or oral agreement.

(2) Payment is made by a person as party to marriage/former marriage or civil partnership, or for the benefit person under 21 for their maintenance.

- Exclusion continues to apply to payments made by personal representative (s.730(6)).

Legislation:

Cases:

HMRC manuals:

Commentary:

- Attribution rule does not apply to income which (ITTOIA s.627(1)):

(1) Arises under a settlement made by one party to a marriage/civil partnership;

(2) Was made by way of provision for the other after dissolution/whilst separate where likely to be permanent.

(3) The income is payable to/applicable for the benefit of the other party.

- This exclusion applies even if settlor retains an interest in the capital of the settlement (e.g. trustees can appoint capital to settlor).

- Query whether the exclusion applies where interests under an existing trust are adjusted upon separation/divorce (see Chamberlain, §11.16).

Legislation: ITTOIA s.627;

Cases:

HMRC manuals:

Commentary: