Be Tax efficent when your marriage breaks up

Marriage breakdown is part of life for a lot of people. There are tax implications which arise when you break up and if you plan the breakup agreement then you can in fact avoid or reduce your tax liabilities. Here are some tax tips to consider if  you do formally break up
(1) One parent tax credit, after a formal breakup both spouses go back to been assessed as single people. If they have children then they both can claim the one parent family tax credit as long as the child stays overnight with either spouse at least one night of the year. Therefore it is important that in any formal agreement of divorce or seperation that both parents are allowed have any children stay with them overnight at least one day during the year.
(2) There are two types of maintenance payments. The first is payments to support the children this is nonclaimable by the payer and is non taxable in the hands of the recipent. However the second type is payments to support the seperated spouse. These are deductible from the income of the person paying the maintenance and they are taxable for the spouse receiving them. So if the ex husband pays 100 euro to his ex wife to support her then he can deduct the 100 euro from his income for tax purposes and the ex-wife has to include the 100euro in her taxable income. This is where tax planning/avoidance can arise. If the husband pays tax at a higher rate than the ex-wife then it is a good idea to agree that the maintenance payments are for the ex wife rather than the children. So if the husband pays tax at 41 % then he would save 41euro in tax and if the wife pays tax at 20% she only pays 20euro tax. This over the course of year if the husband pays 10000euro maintenance per year could amount to a tax saving of 2100euro. Which then could be passed on as a maintenance payment to the children. If the ex-wife is below the threshold for tax then the saving could potentially be 4100euro per year
(3) Stamp Duty, Capital Gains tax and Capital acquistions tax. A disposal or transfer to your spouse when they are living with you is exempt from tax. As is a transfer done under a court order or a formal deed of seperation or divorce. If assets are transfered after the divorce or outside of the formal agreements then the sale or transfer will be open to stamp duty, capital gains tax or captial acquistions tax. So to avoid tax make sure all transfers are done during the divorse or seperation formal process