Will My Spousal Maintenance Payments be Taxed?

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No. In the UK, HM Revenue and Customs doesn’t treat spousal maintenance as taxable income.

The reason for this is that the party who is paying the maintenance has already been taxed on their income. This means that if the party receiving the maintenance were also to pay tax on this, the same income would have been taxed twice.

Will child maintenance affect my benefits and tax credits?

If you receive child maintenance, it should not affect any benefits that you get or are entitled to.

However, if you are entitled to Council Tax Reduction and you receive child maintenance the amount could be reduced, depending on where you live.

When you apply for Tax Credits, you have to provide details of your annual income. The income that you declare will include earnings from:

  • Pensions
  • Employment
  • Investments
  • Property

However, you do not have to declare any maintenance payments – either child or spousal maintenance – when you apply for tax credits.

Do I pay tax on child maintenance payments I receive?

As with spousal maintenance, you don’t pay any Income Tax on any child maintenance payments that you receive.

Do I pay tax on child maintenance payments I make?

If you are the person paying child maintenance, you will be paying this out of your post-tax income and so these payments are not taxed. In addition, you can’t benefit from any tax relief on these maintenance payments.

The exception to this, and where tax relief is available on maintenance payments, is where:

  • Either you or your ex-spouse were born before 6 April 1935
  • You are paying court-ordered maintenance following the end of a relationship (divorce, separation or dissolution)
  • The payments are for the maintenance of either your former spouse or civil partner (as long as they have not remarried or are in a new civil partnership) OR for any children you have under the age of 21.

This is called Maintenance Payments Relief. Under the relief, you can claim up to 10% of £3,260 of the maintenance you pay to your former spouse/civil partner – so up to £326 a year.

 


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