Tax Relief Rules in respect of Maintenance Payments - Basis of Assessment?

[Mactha]

Hi AAM community,

My wife and I are in the process of separating and I will be paying maintenance in the form of paying the mortgage on our PPR, Spousal Maintenance and Child Maintenance. From research, I know the latter is not tax deductible. We are currently on Joint Assessment.

My question is: In order to qualify for tax relief on the Mortgage and Spousal payment elements, does it make a difference whether we switch to Separate Assessment or Separate Treatment? Or another way of asking the question - if we change to Separate Assessment, do these payments qualify for Tax Relief?

Many thanks in advance,
Mac.

 

[Daphne]

My understanding is that it works as follows:

- If you elect for separate treatment (ie taxed as single people), the person paying the maintenance can claim tax relief, but the person receiving the maintenance must pay tax on what they receive
- If you elect to be taxed as a married couple (separate assessment - you cannot opt for joint assessment once you are separated) the payments are ignored for tax purposes. In other words - the person paying the maintenance can’t claim any tax relief, but the person receiving it doesn’t have to pay tax on it.

The net effect is that - broadly* - the total tax paid by both persons added together is the same irrespective of what basis of assessment is chosen.

The above assumes the payments are pursuant to a legally enforceable separation agreement.

*there may be nuances depending on individual rates of tax/tax credits used etc.

 

[ClubMan]

I will be paying maintenance in the form of paying the mortgage on our PPR, Spousal Maintenance and Child Maintenance. From research, I know the latter is not tax deductible.

That is correct that the child maintenance isn't tax deductible. Spousal maintenance may be tax deductible if it's legally enforceable - e.g. via a court approved judicial separation - but not if voluntary. However I'm not sure if mortgage payments on a property presumably in shared ownership would be tax deductible? You might want to get clarification on that before attempting to claim tax relief.

 

[Mactha]

Thanks @Daphne and @ClubMan. I hadn't thought of your point in respect of the tax treatment where the property is in joint names. The property will be occupied by my (ex) spouse and my children and I won't live there but definitely requires clarification. Would welcome any input from the AAM community if posters have had similar experience. Thanks.

@ClubMan Is it ok if I start a new post just for this specific question? Just wondering if it would get more views if the title was quite specific? Thanks.