NOTE: This post is more than 12 months old, and the information contained within may no longer be accurate.
Alistair Cunningham
How you might benefit
There are principally four criteria to consider:
- Are you married or in a civil partnership?
- Does one of the two of you have income of £10,600 or less (and this can include an additional £5,000 of savings interest)?
- Is the other a basic rate tax-payer (broadly speaking income of between £10,601 and £42,385)?
- Were you both born after 6 April 1935? (those born before get a more generous allowance already)
If the answer to all of the above four questions is yes then the spouse (or civil partner) which has the unused personal allowance can transfer £1,060 (and no more) to the other. As this means 20% less income tax is paid on the £1,060, the potential saving could be £212.
If the lower earning spouse (or civil partner) has less than £1,060 available they must still transfer the full £1,060. This means they will end up paying basic rate tax – still of benefit but a classic unnecessary over-complication!
Claiming
You can register online here. Apparently HMRC are issuing notification in batches. Usually you will receive a tax code amendment, but it can take up to 14 weeks.
Contact the Author
Alistair, a founding director of Wingate Financial Planning, specialises in complex client cases, particularly owner-managed businesses, pensions, and retirement planning. He is a member of the Wingate Investment Committee and a Chartered Financial Planner, Fellow of the Personal Finance Society, and member of STEP and the Chartered Institute of Taxation.
