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HMRC internal manual

Double Taxation Relief Manual

Double Taxation Relief Manual: Guidance by country: United States of America: Alimony and maintenance

Old Agreement: applies for US taxes up to 31st December and UK income tax up to 5th April 2003

Where alimony is paid by a resident of one country to a resident of the other, Article 18(2) provides that the recipient will not be liable to tax on the alimony in the country of which the payer is a resident. Article 22(1) provides that income not specifically dealt with elsewhere in the agreement is taxable only in the country of which the recipient is a resident.

Thus alimony or maintenance paid by a resident of the United States to a divorced or separated wife, or to any of the children, who is a resident of the United Kingdom will not be assessed to US tax. Claims for tax credit relief for United States tax should therefore not arise.

New Agreement

The provision which is now at Article 17(5) generally covers periodic payments made pursuant to a written separation agreement or a decree of divorce, separate maintenance, or compulsory support. It exempts from tax in both the UK and the US such payments made by a resident of one of the Contracting States to a resident of the other Contracting State, unless the payments are deductible in the payer’s State of residence. Thus, child support payments from a resident of a Contracting State to a resident of the other Contracting State are taxable in neither Contracting State, assuming that the payments are not deductible to the payer. By contrast, deductible alimony payments made by a resident of a Contracting State to a resident of the other Contracting State are taxable, exclusively, in the recipient’s State of residence.