Strategic Solutions partner with SafeWise to boost financial education in Dorset
June 26, 2019
Running with the Bulls? Or waiting for a Bear hiding in the woods?
May 1, 2020
A Simple Way To Save Income Tax!!
7 Jun 2016
If you are
Married (or civil partner) and
One spouse earns under £11,000 and
The other earns between £11,000 and £43,000 (basically not a higher rate tax payer)
Then you can switch 10% of the lower earners tax code to the higher earner, saves over £200 per year and you can back date for last year if you get a move on, it’s a little known HMRC rule introduced a couple of years ago. Takes about 10 minutes (maximum, I promise) to complete on the government website, just need both national insurance numbers and some basic bank details. £400+ for 10 minutes work; great news.
I think I have done this for about 20 clients in last couple of weeks, (and parents and in-laws). I’ve never been so popular!
The details (the more boring bits)
Legislation introduced in Finance Bill 2014 stated that from the 2015-16 tax year, a spouse or civil partner who is not liable to income tax because their income is below their personal allowance or who is liable to income tax at the basic rate, dividend ordinary rate or the starting rate for savings is able to elect to transfer £1,100 of their personal allowance to their spouse or civil partner. There will be a corresponding reduction to the transferring spouse's personal allowance.
A spouse or civil partner who is only liable to income tax at the basic rate, dividend ordinary rate or the starting rate for savings will receive the transferred personal allowance. The transferred allowance will be given effect as a reduction to the recipient's income tax liability at the basic rate of tax. (I.e. you can receive Marriage Allowance if your income is between £11,000 and £43,000).
Married couples or civil partnerships entitled to claim the married couple's allowance will not be entitled to make a transfer (where one or both spouses or civil partners were born before 6 April 1935).
4.2 million non-taxpayer/ basic-rate taxpayer married couples stand to gain; most non-taxpayers will be no worse off while the basic rate taxpayer will gain.
Marriage Allowance lets you transfer 10% of your Personal Allowance to your husband, wife or civil partner. This reduces the tax by up to £212 in 2015/6 and £220 in 2016/7.