Can my partner help me cut my tax bill?

admin
10 February 2014

Q

I am retired and currently getting my state pension, as well as receiving two company pensions. I pay around £40 a month income tax as my total income is above the threshold for a pensioner, while my wife receives her state pension and a very small pension from a former employer.Am I able to use my wife's tax code to reduce my tax?
From
JO/Cheshire

A

There is no scope to use your wife's personal allowance but you may be able to use the Married Couple's Allowance - which could save you up to 10% of your tax bill – against all your income.

It's only available to married couples or civil partnerships where one of the spouses was born before 6 April 1935.

If your tax bill isn't high enough to use up all of your Married Couple's Allowance, you can inform HMRC after the end of the tax year to transfer any unused allowance to your spouse if they pay tax. You can't get a refund of any excess not used.

You can decide to share the minimum Married Couple's Allowance between you or, if you both agree, you can choose to transfer the whole of the minimum Married Couple's Allowance to your spouse or civil partner. In this case, you'll need to tell HMRC before the start of the tax year.

To claim Married Couple's Allowance, phone HMRC on 0300 200 3300 giving details of your marriage and your spouse. You will also need to give your National Insurance number. HMRC can adjust your tax code and so you will get the benefit automatically.

However, check your tax code as there have been many numerous errors causing the taxpayer to over or underpay.    

If you were born after 5 April 1935, you would not be entitled to Married Couple's Allowance.

However, you may be able to transfer your income-producing assets you own to your wife whose personal allowance is not used up. This would mean that there is no income tax to pay to the extent it is covered by the personal allowance.

How to claim married couple's allowance

You can reduce your tax bill by up to 10% through the Married Couple's Allowance, if at least one spouse was born before 6 April 1935. If that is the case and you were married before 5 December 2005, the husband can only claim Married Couple's Allowance. If you were married after 5 December 2005, the spouse with the higher income can claim the tax reduction.

The maximum amount of Married Couple's Allowance is £8,165 and the minimum amount is £3,140 for the 2014-15 tax year. You receive 10% of the allowance amount - which means your tax saving is at least £314 and can be up to £816.50.The actual amount depends on the claimant's income.

To claim Married Couple's Allowance, you will need to telephone or write to HMRC, with details of your marriage ceremony and details about your spouse, including date of birth.

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