When a marriage / civil partnership breaks down and couples decide to separate, the tax implications can be significant and need to be carefully considered.
The division of assets, tax treatment of maintenance payments and the claiming of tax credits all need to be examined.
Maintenance payments for the support of children are ignored for tax purposes. Payments for the support of a spouse may also be ignored for tax purposes if the couple involved agree to this. Alternatively the spouse maintenance payments can be treated as income for the recipient and as a tax deduction for the payer.
In the year of separation the spouse who has responsibility for making tax returns to the Revenue continues to be treated as a married person for the remainder of that year assuming the couples tax affairs were previously dealt with on a joint basis of assessment. The other spouse / civil partner may be treated as a single person for the remainder of the tax year. Then the couple must decide how they wish to have their tax affairs dealt with.
They may choose to continue as though they were a married couple/ civil partnership and the normal married persons tax credits and 20% tax rate band will apply. Alternatively they may decide to be taxed as two single people.