Wife,s Tax allowance

sidimilo

My wife transferred her tax allowance to me 2 years ago, however she now as a taxable lump sum coming to her of £11,000. At what rate will she be taxed at.

Dazed_and_confused

She can only transfer 10% of her allowance (£1,250 in the current tax year).

What other income does she have?

Where is she resident for tax purposes?

sidimilo

UK resident and no other income

Dazed_and_confused

Ultimately there won't be any tax to pay.

Her reduced Personal Allowance is £11,250 so as her only taxable income is £11,000 there is no tax due.

If it's a pension lump sum of £11,000 all paid in one go she may well find that the pension company deduct £3,357 when they make the payment but based on what you've posted she will be able to reclaim that from HMRC.

Or she can wait a bit longer and HMRC should automatically refund the overpaid tax a few months after the end of the tax year the payment is made in.

NB. If she was Scottish resident for tax purposes and had other income she may have benefitted from the Scottish starter rate of tax, which at 19% is less than the UK basic rate of 20%.

sidimilo

Thanks for your help