Part 44B-1-1 Taxation of Maintenance payments between Cohabitants
Tax Treatment of Former Cohabitants
Payments arising under a maintenance arrangement or asset transfers on cessation of the relationship.
Sections 1031P, 1031Q and 1031R Taxes Consolidation Act 1997
1. Sections 1031P and 1031Q contain the provisions for taxation of maintenance payments between cohabitants where the relationship has ended. For the purposes of those sections the following definitions apply,
“cohabitant” has the same meaning as in section 172 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010;
“qualified cohabitant” has the same meaning as in section 172 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010. This
refers to a party who was in a cohabiting relationship for at least 5 years, or at least 2 years where the parties involved are parents of a dependant child;
“maintenance arrangement” means an order of a court under 175 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 giving rise to a legally enforceable obligation;
“payment” means a payment or part of a payment, as the case may be.
2. Tax position where there is a legally enforceable maintenance arrangement between cohabitants whose relationship has ended and payments are made either directly or indirectly by one cohabitant for the benefit of the “qualified cohabitant”
In the case of former cohabitants only maintenance arrangements made under section 175 Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010
will give rise to a legally enforceable arrangement which will qualify for tax relief.
The application for the maintenance order must be made by a qualified cohabitant.
Relief for the maintenance payment is only allowed in respect of the payment made for the support of the qualified cohabitant, and is allowed in a similar manner to the
treatment of separated spouses or former civil partners.
(a) The cohabitant making the payments (payer) will make the payments gross.
(b) The payer will be allowed, in computing his or her total income, a deduction for maintenance payments made in the year of assessment for the benefit of the qualified cohabitant.
(c) The recipient will be taxable under Case IV, Schedule D, in respect of such maintenance payments received.
(d) Both individuals will be taxed as single persons.
Note that relief for the maintenance payment ceases in all circumstances if the qualified cohabitant –
(a) marries or remarries;
(b) enters into a civil partnership; or
(c) enters into a recognised foreign partnership, which is recognised by virtue of section 5 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010.
3. Capital Gains Tax on the transfer of assets between former cohabitants – section 1031R Taxes Consolidation Act 1997.
Where by virtue of an order made under section 174 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, on or following on from the
ending of the cohabiting relationship, either of the cohabitants disposes of an asset to the other cohabitant, that transfer shall be on the basis of “no gain, no loss” – section 1031R.
This provision does not apply in circumstances where the civil partner acquiring the asset is not subject to tax in the State in the year in which the acquisition took place.
Any subsequent disposal by the cohabitant who acquires the property shall be on the basis that the individual making the disposal is treated as if he/she had acquired it at the time and cost at which it was originally acquired by the other cohabitant.