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Separation & Divorce
The breakdown of relations between husband and wife can be a very traumatic time and, as a result, people rarely give due consideration to the tax consequences of their actions. However, there are long term, and often irrevocable, consequences for tax purposes and therefore it is essential that adequate planning be carried out before any decisions are made.
The rules applicable to informal separation, formal separation and divorce are different and can be complex. The following are just some of the issues we would need to consider:
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If due care is taken, the transfer of the family home should not give rise to tax problems |
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Both spouses may be entitled to the Single Parent's tax credit and increased standard rate cut-off point. |
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Maintenance payments to children are usually exempt but payments to the spouse may have tax consequences, depending on the circumstances. |
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Joint assessment may still be an option, even after formal separation has occurred. |
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