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Personal tax following a divorce

Q: After 35 years of marriage, one of my clients is now finalising her divorce. As part of their financial settlement, the courts will be making an order for her ex-husband in respect of her pension rights. How will this impact on her from a tax point of view?

A: Sharing of pension rights can be done in one of two ways: by use of an attachment order (under the Pensions Act 1995) OR by a pension sharing order (under the Welfare Reform and Pensions Act 1999).

With an attachment order, no rights of ownership are transferred to the ex-husband. This means that she will remain taxable on the whole amount and any amounts received by her ex-husband will be paid to him free of tax.