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Ask Clare Your Own Question
Clare
Clare, Solicitor
Category: UK Tax
Satisfied Customers: 34038
Experience:  25 years exeperience as a high street solcitor
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Do I have to pay tax on the divorce settlement money which

Customer Question

Do I have to pay tax on the divorce settlement money which I will receive as lumpsum. If yes then what is the rate? Is it the regular UK income tax rate?
Submitted: 7 years ago.
Category: UK Tax
Expert:  Clare replied 7 years ago.
hi
no no tax is payable on the lump sum - put if it is invested then you will pay tax on the interest each year
claire
Customer: replied 7 years ago.

When I asked this question to my lawyer (divorce lawyer) she said they are not FSA regulated and cannot say for sure. However at the end she said it is taxable, speak to your bank's financial advisor. The reason I can't ask her things in detail is because my legal aid has been suspended as of now , so she is not liable to work on my behalf.

 

So plz confirm if my understanding is correct, the lumpsum money I get as divorce settlement will not be considered as my income and hence I dont pay any kind of tax whatsoever on that amount in UK.

Only if I put it in investment will I have to pay tax as applicable.

 

Can my husband claim back the tax he paid on that amount??

 

Thanks for your help.

 

 

 

Expert:  Clare replied 7 years ago.
hi
are you both uk based and what tax will your husband have to pay on it
claire
Customer: replied 7 years ago.

yes we are both based in UK.

He is going to pay from his earnings, so he is paying income tax on it.. Can he claim it back as he is giving that earning as divcorce settlement amt.

Expert:  Clare replied 7 years ago.
hi
and how much of a lump sum is he paying?
claire
Customer: replied 7 years ago.
£56000 lumpsum
Expert:  Clare replied 7 years ago.
hi
and how long has he got to pay this ?
claire
Customer: replied 7 years ago.
he will pay as soon as the court order permits... That is within 28 days of the order being passed by the court.
Expert:  Clare replied 7 years ago.
hi
then no it is not taxable and he cannot claim tax relief
claire
Clare and other UK Tax Specialists are ready to help you
Customer: replied 7 years ago.
Thanks for your help... :)
Customer: replied 7 years ago.

Does it depend on the amount or how my husband is going to pay the amt?

Curious as you had asked me the amount and how he is going to pay and within how many days. In what scenario is divorce settlement money taxable. Just want to make sure I dont get taxed on it before I invest it.

Expert:  Clare replied 7 years ago.
hi
i was trying to imagine why your solicitor couldn't give a straight answer to the question so was trying to work out what the potential catch could be as settlements are not liable to tax - the only one i could think of would be if a second home had been sold!
claire
Customer: replied 7 years ago.

He has arranged it by taking personal loan + savings.

 

Thanks a lot for your help.

Expert:  Clare replied 7 years ago.
hi
that is fine and you are welcome
claire

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