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November 28, 2013
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Transferable tax allowance for married couples and civil partners

From April 2015, the government intends to introduce a tax break for married couples and civil partners.

The new transferable tax allowance will enable spouses and civil partners where one partner earns below the annual personal allowance threshold (this is expected to be just over £10,000 by 2015) to transfer up to £1,000 of their un-used personal allowance to their spouse.

Higher and additional rate taxpayers will be excluded from benefiting from the transferable personal allowance.

The proposed change means that the higher earner will earn an additional £1,000 before they start paying income tax.  The tax benefit per couple is therefore restricted to £200 per annum.

It is expected that over four million couples will benefit from the transferable tax allowance, including 15,000 couples in civil partnerships.

It will be of most benefit to those households on lower incomes and it is thought that the main winners will be couples where one spouse works part time or stays at home.

The claim is expected to be made at the end of the tax year through the self-assessment system (starting in 2015/16), therefore those wishing to benefit from the tax break should will receive a refund rather than electing up front and paying less tax during the year.

Many of those eligible for the relief may not currently submit tax returns, and may therefore need to register for self-assessment before they can claim the transferable personal allowance.

We await further detail regarding the proposed rules in due course, however it is thought that the allowance is likely to be referenced in the 2013 Autumn Statement made by George Osbourne on 5 December 2013, see our blog http://wp.me/p3gayI-7m

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