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interest on deferred divorce settlement

Is interest received on a deferred lump sum divorce settlement taxable

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If one spouse in a divorce settlement pays another spouse a fixed cash sum in 10 years, I understand that the settlement is non-taxable. If there is a set rate applied as interest until the lump sum is paid, my understanding is that falls as taxable income by the recipient? Is that correct please? I presume it makes no difference if a particular asset has to be realised in order to pay this fixed cash sum. Many thanks

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By frankfx
02nd Jul 2020 20:08

Presumably solicitors involved.
Ask one of them for the answer.
As a favour mind you.
One of the parties should ask for"clarification'', at no charge please.
Solicitor costs just to open an email can be eye watering.

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By jasonowsky
02nd Jul 2020 21:00

Hello. It's more of a tax question than a legal one and I'm not sure solicitors can give more than basic advice on tax relating to specific areas of law. I think ir may need an approach to tax accountants. Many thanks

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By Paul Crowley
02nd Jul 2020 21:17

If you are sure it is tax you are asking about and It is not worth asking solicitors exactly what the agreement is then dead easy
Interest is taxable

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By jasonowsky
02nd Jul 2020 22:12

Interest certainly isn't always taxable, for example when received in relation to a personal injuries claim. So I will try to find the income tax legislation relating to interest I guess. Broadly though, I'm in agreement

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By whitevanman
02nd Jul 2020 22:38

Interest in a court award for PI is exempt by specific statute. I cannot remember the exact reasoning but I think it was to do with the way it was calculated. Otherwise, interest is indeed taxable.

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By jasonowsky
02nd Jul 2020 22:46

Yes many thanks.

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By jasonowsky
02nd Jul 2020 22:34

Thanks for your help. Think ive found the answer s. 369 ITTOIA 2005 which confirms that interest is chargeable and lists particular exemptions, and interest on deferred mortgage settlement does not feature

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