Hi all
A colleague of mine was divorced last year and his settlement is imminent. When he gets the wedge, does he have to declare this as income? Does he have to pay 25% income tax on it? Any way he can minimise losses?
TIA
Phil
Declaring Divorce Settlement
Aug 19, 2005
4 Replies
Of course not. A divorce settlement isn't income. It is a distribution of assets the couple *already* jointly own, and the settlement simply determines what is to be whose. In any case inter-spouse transfers are tax free, and transfers in a divorce settlement are presumably deemed to take place just before they cease to be spouses rather than just after.
No, but where do you get 25% from?
By not remarrying.
"Ronald Raygun" wrote
You're assuming he'd end up "worse-off" on a subsequent divorce. If it transpires in a similar manner to his first marriage, he'd end up "getting another wedge"... [Does he go round marrying rich women?!!]
He said "minimise losses", not "minimise his losses". :-)
"Ronald Raygun" wrote
Teehee! But then again - a good marriage, with synergy, can create gains for both parties!
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