What do I need to do when I separate?
You must inform the Division by each completing a form R113. This form asks for important information including the date that you permanently separated, please note that this is not the date of your divorce or annulment of a civil partnership. If you were previously jointly taxed up to the date that you separated, you will now each need to complete separate income tax returns, making separate claims for deductions and paying your own tax.
If you are still living in the same house, contact the Division for more information
What happens about Personal Allowances?
The treatment for the income tax year in which you separate is as follows:-
If you were jointly assessed up to the date of separation
With effect from the year of assessment in which the permanent separation has taken place, both spouses/partners are treated as single persons.
For later tax years each spouse/partner is treated as a single person and assessed only on their own income.
If you are independently assessed
As both spouses/partners are treated as single individuals throughout, only one assessment is required on each person and only one single allowance is granted to each person in the year of separation.
What about our mortgage?
Tax relief is granted to the person or persons paying the interest and owning the property. However, following separation, you may be able to claim relief even if you do not own the home that you shared before the separation. To make a claim you must be able to show that you have paid the interest. If each spouse/partner pay part of the interest, the relief is divided between them.
I am paying maintenance, will it be tax deductable?
With effect from 6 April 2012, tax relief for alimony and maintenance paid has been abolished. The information below relates to maintenance paid prior to 6 April 2012.
For payments made prior to this date, only maintenance payments which are legally enforceable i.e. (made under an Order of Court or other legally binding written agreement) are allowable for income tax purposes. If payments are allowable, the payer will be allowed a deduction from income on the amount paid in the year in which they are made.
In order to be allowable, the payments must be by one of the parties to either the other party for their general maintenance or for the benefit of a child of the family for its general maintenance and/or education, or to a child of the family for its general maintenance and/or education.
There are certain conditions the payments must satisfy:
- The agreement or Order must be made in the Isle of Man or if there is an Order made under a competent jurisdiction outside the Isle of Man both parties to the Order must be resident in the Island
- The person making the payment must be resident in the Island
- The payment must be regarded as income in the hands of the recipient who, in turn, must be assessable to Manx income tax on it, i.e. resident or non-resident tax
- The 2 parties concerned must not be living together as man and wife/civil partners at the time any of the payments are made.
NB: A copy of the Court Order or legally binding agreement will be required by the Division.
Voluntary arrangements are not usually assessed on the recipient or allowed as a deduction by the payer.
Please note that payments made to a non-resident under a Manx order or agreement, are considered to be the Manx source income of the recipient and therefore subject to Manx non-resident tax at source. The tax deducted must be received by this office before relief on the payments can be granted in the assessment.
Do I have to declare maintenance I am receiving as income?
With effect from 6 April 2012, alimony and maintenance received are no longer classed as taxable income. The information below relates to maintenance received prior to 6 April 2012.
For payments received prior to this date, the payments (except for voluntary payments) are part of your income. They will be taxed if your total income is enough for you to pay income tax. How you pay the tax depends on your personal circumstances.
If you are working, your maintenance payments may be incorporated in your tax code, and income tax paid through deductions from your pay. You should show maintenance payments in any tax return you are asked to fill in. If you should have received payments, but they have not been paid (or only partially paid) to you, you will need to inform the Division so that your tax position can be reconsidered.
Maintenance of a child
If the payments for maintenance of a child under a legally binding agreement or Court Order are payable to you, then they are treated as your income.
But if under the terms of the Court order, they have to be paid directly to the child, then they become the income of the child. In this case, there will only be tax to pay if the total of the payments and other income is more than the allowances that the child is entitled to, and an assessment will be raised on the child.
Court Orders made outside the Island
If the Court Order is made outside the Isle of Man and the maintenance recipient is not resident in the Isle of Man, the payments made are not deductible from the payers income arising in the Isle of Man.
However, by concession, payments will be allowed as a deduction from any income the payer receives from the country in which the Order has been taken out, up to the level of that income only. This concession ceased on 5 April 2012.
I am a single parent, will I be entitled to anything?
If you are being treated as a single person, living on your own and you have a child living with you, you may be able to claim the Additional Personal Allowance.