1. This clause provides for the withdrawal of tax relief on maintenance payments save where one or both of the parties to the marriage is aged 65 or over at 5 April 2000. For those who remain eligible for relief, the rules for maintenance arrangements set up on or after 15 March 1988 ("new rules") will apply, notwithstanding that their maintenance arrangements may have been set up before 15 March 1988. Those receiving maintenance payments under arrangements made before 15 March 1988 will no longer be taxable on the payments they receive. This clause will be given effect from 6 April 2000.

2. Maintenance relief is being withdrawn as part of the package of measures to repeal the married couple’s allowance, with which the relief is closely linked. As the married couple’s allowance is being retained where one or both of the parties to the marriage is aged 65 or over at 5 April 2000, maintenance relief is similarly being retained for this group. But the special transitional relief for payments under maintenance arrangements originally set up before 15 March 1988 ("old rules") is being ended altogether and all relief for the 65s and over will now be under the "new rules".

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3. Subsection (1) provides that section 347B(1) Taxes Act 1988, which sets out the conditions for tax relief applying to all payments made under maintenance arrangements set up on or after 15 March 1988 (the "new rules"), shall be subject to new subsection (1A).

4. Subsection (2) inserts that new subsection (1A) after section 347B(1). It provides that a payment is not a qualifying maintenance payment within section 347B unless one of the parties to the marriage was born before 6 April 1935.

5. Subsection (3) substitutes "subsection (3)" for the reference in section 347B(2) to "subsections (3) and (4)". This is a consequential amendment arising from the repeal of section 347B(4), which relates to the transitional relief for payments made under maintenance arrangements set up before 15 March 1988 ("old rules") and is no longer required.

6. Subsection (4) substitutes "section 257A(5A)" for the reference in section 347B(3) to "section 257A(1)". This limits the amount of tax relief for maintenance payments to the basic level of the married couple’s allowance for the 65s and over.

7. Subsection (5) substitutes "subsections (2) and (3)" for the reference in section 347B(5A) to "subsections (2) to (5)". This is a consequential amendment arising from the repeal of section 347B(4) and (5), which relate to the transitional relief for payments made under maintenance arrangements set up before 15 March 1988 ("old rules") and are no longer required.

8. Subsection (6) substitutes "subsection (1)(a)" for the reference in section 347B(8) to "subsections (1)(a) and (5)(a)". This is a consequential amendment arising from the repeal of section 347B(5), which relates to the transitional relief for payments made under maintenance arrangements set up before 15 March 1988 ("old rules") and is no longer required.

9. Subsection (7) ensures that payments made under maintenance arrangements set up before 15 March 1988 ("old rules") will no longer qualify for the transitional relief.

10. Subsection (8) provides that the provision will have effect in relation to payments falling due on or after 6 April 2000.

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11. The current rules for tax relief on maintenance payments were introduced in 1988 and apply to all payments made under maintenance arrangements set up on or after 15 March 1988. These rules are known as the "new rules". They provide tax relief for payments made by a divorced or separated husband or wife to the other party to the marriage. The tax relief is limited to the level of the married couple’s allowance and, in common with the married couple’s allowance, is given at the rate of 15 per cent, dropping to 10 per cent from 6 April 1999.

12. Tax relief under the "new rules" is available for payments made under a court order, a legally binding written agreement or a Child Support Agency assessment. The payments must be made to the other party to the marriage, who must not have remarried. The payments must be for their own maintenance or for the maintenance of a child of the family under the age of 21. Recipients of "new rules" maintenance payments are not taxable on the payments they receive.

13. Payments under maintenance arrangements set up before 15 March 1988 ("old rules") can qualify for tax relief at the payer’s top rate of tax on payments up to the level paid in 1988-89. However, in common with the married couple’s allowance and "new rules" relief, the first slice of relief, on payments up to the level of the married couple’s allowance, is given at the rate of 15 per cent, dropping to 10 per cent from 6 April 1999. Recipients of "old rules" maintenance payments are taxable on the payments they receive up to the level of the 1988-89 payments, save that a former spouse is not taxable on the first slice of the payments up to the level of the married couple’s allowance.

14. The effect of the provision will be to withdraw tax relief from 6 April 2000 for all maintenance payments save where one or both of the parties to the marriage is 65 or over at 5 April 2000. Relief for the 65s and over will be under the "new rules", regardless of the date when the maintenance arrangements were set up.