Divorce - Tax

At the time of separation and on divorce, careful consideration must be given to the tax implications.

Maintenance orders which were made before the provisions of the Finance Act 1988 came into force can still attract substantial tax relief. Orders which have been made since that time are not so favoured; if maintenance is paid to the other spouse for himself or herself or for the children (and the recipient has not remarried) only limited income tax relief is available.

Where assets are sold or property transferred between husband and wife, consideration must be given to the tax implications. It is important that advice is taken as early as possible during the tax year in which separation (not divorce) takes place.