Introduced this month is a new tax benefit which means that a spouse or civil partner may now be able to transfer some of their unused personal allowance to the other. This is aimed directly at couples where one partner does not earn enough to fully utilise their personal allowance and is only available to couples where neither is a higher rate tax player.
This new transferrable personal allowance allows spouses to transfer up to £1,060 of unused personal allowance from the partner that has taxable income below the personal allowance threshold (currently £10,600) to their higher earning spouse, as long they are just basic rate taxpayers.
If your income is below £10,600, and is likely to remain so for the rest of this tax year, and your spouse, or civil partner, earns below the £42,385 higher rate threshold, you can apply to have this personal allowance transferred.
The benefit of such a transfer is that as a couple you will pay up to £212 less tax this year than you would do if you don’t apply.
This is not something that will be automatically actioned on your behalf by HMRC, you will need to apply. To request this transfer of personal allowance, you currently need to register on the HMRC website at https://www.gov.uk/marriage-allowance and they will then contact you to ensure eligibility.
Should you have any questions about this, please do speak to your accountant or your adviser here at Chilvester Financial.