Transfer of Income Tax

dropthepilot

Hi everyone

I'm pretty new to this so excuse me if I've put this in the wrong place.

I got married last year and I've heard that, starting with TY2015-16, HMRC are allowing some of your married Income Tax allowance to be transferred to your spouse.

Currently, I don't pay any tax from my income (tax code NT) and my spouse is on the standard "single person's" tax code. So, I was wondering:

1. Would I be able to transfer some of my IT allowance to my spouse without us becoming financially linked? (I remember Martin mentioning you don't have to be financially linked when married but I don't know how it applies with HMRC)

2. Would this mean I would have to complete a personal tax return every year just because if the tax transfer? And,

3. If so, what's the maximum amount I can transfer annually?

I look forward to the help anyone can provide.

TheCyclingProgrammer

What do you mean by financially linked?

No final details if there's allowance transfer have been released yet but I believe it was planned that you could transfer £1000

zygurat789

What is the reason for your NT code?
This transfer will only be of benefit if, at the end of the tax year, you have taxable income of less than your allowances. Then you will be able to transfer up to £1050 of your unused allowance to your spouse.

CLAPTON

NT codes are often related to bankruptcy and concern for being financially linked has similar connotations

I don't know how this would affect the transfer of tax allowance

The NT code only usually lasts one year

Just_landed

Have a look at the link below


https://www.gov.uk/marriage-allowance

xylophone

http://www.hmrc.gov.uk/manuals/pommanual/PAYE11010.htm
information on NT codes.

dropthepilot

CLAPTON wrote: »

NT codes are often related to bankruptcy and concern for being financially linked has similar connotations

I don't know how this would affect the transfer of tax allowance

The NT code only usually lasts one year

CLAPTON... NT means 'No Tax' and can relate to many types of income where 0% income tax is due. An example could be a regular payment (monthly/annully) from an industrial injuries settlement.

Anyway... the day after I posted this, HMRC announced that they were accepting "registration of interest" in the new Married Allowance. I phoned them and it turns out you can transfer up to 10% of your unused basic rate tax allowance to your spouse/civil partner (for FY2015-16 that will be about £1,050). This means anyone whose tax code is NT will be able to transfer the full 10% without having to worry about going over their tax-free threshold.

Also, I was told that financially linked doesn't come into it as your income tax is based on individual income, so it's not like having joint names on a bank account or mortgage.

I'll come back and let everyone know what happens after the application process is completed (it starts in about 14 weeks, believe it or not!!) and they tell me the amount that's been transferred.

Thanks to everyone who has responded and if anyone has more info on the subject to post, feel free to do so.

Mrs_Arcanum

dropthepilot wrote: »

CLAPTON... NT means 'No Tax' and can relate to many types of income where 0% income tax is due. An example could be a regular payment (monthly/annully) from an industrial injuries settlement.

Anyway... the day after I posted this, HMRC announced that they were accepting "registration of interest" in the new Married Allowance. I phoned them and it turns out you can transfer up to 10% of your unused basic rate tax allowance to your spouse/civil partner (for FY2015-16 that will be about £1,050). This means anyone whose tax code is NT will be able to transfer the full 10% without having to worry about going over their tax-free threshold.

Also, I was told that financially linked doesn't come into it as your income tax is based on individual income, so it's not like having joint names on a bank account or mortgage.

I'll come back and let everyone know what happens after the application process is completed (it starts in about 14 weeks, believe it or not!!) and they tell me the amount that's been transferred.

Thanks to everyone who has responded and if anyone has more info on the subject to post, feel free to do so.

I am one of those who falls between two tax issues. I usually pay no tax because my pension contribution takes me below the tax threshold. Yet technically for 2014/15 I should pay tax on just over £1100 of income.

By year end I will have paid the grand sum of £15 income tax. So it will be interesting to see if this new allowance will apply to me if they take pension contributions into consideration.

CLAPTON

Mrs_Arcanum wrote: »

I am one of those who falls between two tax issues. I usually pay no tax because my pension contribution takes me below the tax threshold. Yet technically for 2014/15 I should pay tax on just over £1100 of income.

By year end I will have paid the grand sum of £15 income tax. So it will be interesting to see if this new allowance will apply to me if they take pension contributions into consideration.

You will be able to transfer part of your tax allowance to your spouse as it has nothing to do with where you pay tax or not : in some circumstances it may make no sense to do so but that's up to you.

dropthepilot

Mrs_Arcanum wrote: »

I am one of those who falls between two tax issues. I usually pay no tax because my pension contribution takes me below the tax threshold. Yet technically for 2014/15 I should pay tax on just over £1100 of income.

By year end I will have paid the grand sum of £15 income tax. So it will be interesting to see if this new allowance will apply to me if they take pension contributions into consideration.

If they take pension contributions into account now, I don't think there will be any change to that wef April. The way I see it they're saying that, if you're income will be below £10,050 in FY2014-15, you'll be able to transfer up to 10% of your allowance to your spouse/civil partner. Examples:

Example 1:
Annual Income: £11,050
Taxable Income: £1,000
Result: No tax allowance available for transfer.

Example 2:
Annual Income:£9,050
Taxable Income: Nil (actually -£1,000)
Result: Transfer of UP TO £1,000 to spouse/civil partner available (i.e. the difference: £10,050-£9,050=£1,000)

Example 3:
Annual Income: £2,050
Taxable Income: Nil (actually -£8,000)
Result: Transfer of UP TO £1,050 to spouse/civil partner (i.e. max 10% of £10,050 tax allowance even though there is a higher amount available)

If anyone else can think of a clearer way to explain this, please try!! :rotfl:

purdyoaten

dropthepilot wrote: »

If they take pension contributions into account now, I don't think there will be any change to that wef April. The way I see it they're saying that, if you're income will be below £10,050 in FY2014-15, you'll be able to transfer up to 10% of your allowance to your spouse/civil partner. Examples:

Example 1:
Annual Income: £11,050
Taxable Income: £1,000
Result: No tax allowance available for transfer.

Example 2:
Annual Income:£9,050
Taxable Income: Nil (actually -£1,000)
Result: Transfer of UP TO £1,000 to spouse/civil partner available (i.e. the difference: £10,050-£9,050=£1,000)

Example 3:
Annual Income: £2,050
Taxable Income: Nil (actually -£8,000)
Result: Transfer of UP TO £1,050 to spouse/civil partner (i.e. max 10% of £10,050 tax allowance even though there is a higher amount available)

If anyone else can think of a clearer way to explain this, please try!! :rotfl:

Your arithmetic is slightly out - 10% of 10500 (not 10050) is 1050. In any case I believe that the personal allowance will be 10600 in 2015/16 (not 2014/15) with a maximum of 1060 transferable.

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2015-16/tax-and-tax-credit-rates-and-thresholds-for-2015-16