Ask the Experts: "Can I get a larger personal tax allowance because my spouse doesn't work?"

Published by Patrick Connolly on 11 September 2017.
Last updated on 11 September 2017

Q

If my spouse is not earning any income, can my personal tax allowance be increased since he is part of the household?

He wants to take early retirement, but defer taking his pension. I want to continue working.

From:
CS/Haddington

A

A personal tax allowance is just that, a personal allowance, and it cannot usually be transferred between spouses. However, there is an exception to this.

The marriage allowance allows your husband to transfer £1,150 of his personal allowance to you as the higher-earning spouse. This could reduce your tax bill by up to £230 in the current tax year.

To benefit from this, your husband must have annual income of £11,500 or less and you must earn between £11,501 and £45,000 (£43,000 in Scotland) a year. So your eligibility in the current tax year may depend on the amount your husband earns before he takes early retirement.

Patrick Connolly is a certified financial planner at Chase de Vere

The tax benefits of marriage

The taxman offers married couples and civil partners a number of perks that it can pay to take advantage of.

Marriage Allowance

As mentioned above, married couples in certain earnings brackets can transfer part of their personal allowance from one to the other in order to bring their income tax bill down by up to £230 a year.

Inheritance Tax (IHT)

Spouses and civil partners can pass assets to their other half free of IHT when they die. Then when their partner dies they can use both their IHT allowances. This means the IHT allowance effectively doubles from £325,000 to £650,000 for married couples.

Capital Gains Tax (CGT)

Married couples and civil partners can also pass assets between them free of CGT meaning they can make the most of both their personal allowances – £11,100 each this year.

This article was written in response to a reader’s question. If you have a financial or work/career question that has left you scratching your head ask our panel of experts who will aim to shine some light on the matter.

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