Revenue Note for Guidance
This section provides that payments made under a maintenance arrangement by one party to a marriage to the other party of that marriage will —
While a separated couple are treated for tax purposes as if unmarried, there is provision in section 1026 for a separated couple to jointly elect for joint assessment in which case maintenance payments are ignored for tax purposes and the foregoing paragraph will not apply.
Maintenance payments specifically for the benefit of children remain the income of the payer. No deduction is due in respect of such payments and the recipient is not taxable on such payments.
(1) A “maintenance arrangement” is defined as any legally enforceable arrangement under which payments are made by one person to another in consideration, or in consequence, of the annulment or dissolution of a marriage or of a separation of the kind referred to in section 1015. The definition is wide enough to cover a court order, an arbitration award and a deed of separation including foreign orders and arrangements. It is not intended that any regard be had for tax purposes to unenforceable payments.
A “payment” includes a part of a payment.
References to a child of a person includes a child in respect of which, before making the maintenance arrangement, the person concerned was entitled to relief under section 465 in respect of an incapacitated child.
(2)(a) This section applies to payments made, directly or indirectly, by a party to a marriage, under or pursuant to a maintenance arrangement relating to the marriage, for the benefit of either a child of that party or the other party to the marriage. The payments must be —
This section does not apply to payments under a maintenance arrangement made before the 8th of June 1983 unless the arrangement is replaced by another new or varied arrangement or the couple jointly request that the section should apply.
(2)(b) Any payment which —
is treated as being for the recipient’s benefit.
This applies whether or not the payment is conditional. For example, if the payment is conditional on the recipient (usually the wife) maintaining the child without specifying the amount she must spend on the child, that payment is treated as the recipient’s income. While payments to third parties are excluded, payment of rent or school fees are treated as of benefit to the recipient spouse or child and not the landlord or owner of the school.
(2)(c) Where an ascertainable sum is allocated under the maintenance arrangement for the benefit of the child, such sum is not considered to be income of the recipient spouse, but is treated as income of the paying spouse (under section 795 income settled on a minor is deemed to be the income of the settlor).
(3) Where the payment is for the benefit of the recipient spouse, and the couple are assessed to tax as single persons —
(4) Where the payment is for the benefit of a child, and whether or not the parents are taxed singly or jointly —
(5) Where a spouse is claiming a deduction of the amount of maintenance from total income, this section applies the general income tax provisions governing —
Relevant Date: Finance Act 2020