Asset poor Income rich

teuchter66

Is there any way of cutting Income Tax for an over-75 couple where one partner has $9k state pension and £36k  and £5k from two DB pensions, while the other has £4k from state pension.

Age-exempt from the usual ploys of salary sacrifice and pensions contributions etc are there any options for sharing our joint income of £54k in a more tax-efficient way short of divorce, death or moving from Scotland to England.

Thanks

Dazed_and_C0nfused

Is one of them old enough that they are entitled to Married Couple's Allowance?

Jeremy535897

There is no mechanism to transfer pension entitlement from one spouse to the other, unfortunately. Couples with unequal income is one of the most unfair elements of our tax system, easily solved (as in the US) by allowing an election to file jointly, but that's not available in the UK (apart from the paltry transfer of one tenth of the personal allowance, not available where the recipient is a higher rate taxpayer).

teuchter66

Both over 75, previously claimed had to give it up when Scotland started freezing the upper limit a couple of years ago.

Dazed_and_C0nfused

teuchter66 said:

Both over 75, previously claimed had to give it up when Scotland started freezing the upper limit a couple of years ago.

Being higher rate only limits the amount of Married Couple's Allowance, it doesn't prevent a valid claim.

Are you getting confused with Marriage Allowance?

EdSwippet

Jeremy535897 said:

Couples with unequal income is one of the most unfair elements of our tax system, easily solved (as in the US) by allowing an election to file jointly, ...

An election would solve it.

Just a note though that this is not what the US has. Rather, if you are married you must file a married status return (typically, but not necessarily, a joint return). And since the allowances and tax brackets for married status returns are in places less than double those for single people, in some cases this leads to a marriage tax penalty. Here, a married couple pay more in tax on the same income than if they were not married and were taxed singly.

[Deleted User]

EdSwippet said:

Jeremy535897 said:

Couples with unequal income is one of the most unfair elements of our tax system, easily solved (as in the US) by allowing an election to file jointly, ...

An election would solve it.

Just a note though that this is not what the US has. Rather, if you are married you must file a married status return (typically, but not necessarily, a joint return). And since the allowances and tax brackets for married status returns are in places less than double those for single people, in some cases this leads to a marriage tax penalty. Here, a married couple pay more in tax on the same income than if they were not married and were taxed singly.

Anyone else old enough to remember WEE and separate assessment in the U.K.? 

Jeremy535897

[Deleted User] said:

EdSwippet said:

Jeremy535897 said:

Couples with unequal income is one of the most unfair elements of our tax system, easily solved (as in the US) by allowing an election to file jointly, ...

An election would solve it.

Just a note though that this is not what the US has. Rather, if you are married you must file a married status return (typically, but not necessarily, a joint return). And since the allowances and tax brackets for married status returns are in places less than double those for single people, in some cases this leads to a marriage tax penalty. Here, a married couple pay more in tax on the same income than if they were not married and were taxed singly.

Anyone else old enough to remember WEE and separate assessment in the U.K.? 

Indeed I am. Thankfully I only had one client couple that elected for separate assessment, and the consequent complicated allocation of the tax liabilities (the use of separate assessment, as opposed to WEIR, saved no tax, although you could do both).

As to the US system, my comment about filing jointly was shorthand for a complex reality, where it didn't matter given the context. I should know better!

Pennywise

purdyoaten2 said:

EdSwippet said:

Jeremy535897 said:

Couples with unequal income is one of the most unfair elements of our tax system, easily solved (as in the US) by allowing an election to file jointly, ...

An election would solve it.

Just a note though that this is not what the US has. Rather, if you are married you must file a married status return (typically, but not necessarily, a joint return). And since the allowances and tax brackets for married status returns are in places less than double those for single people, in some cases this leads to a marriage tax penalty. Here, a married couple pay more in tax on the same income than if they were not married and were taxed singly.

Anyone else old enough to remember WEE and separate assessment in the U.K.? 

Yes, I spent a few years working in tax in the 80s and comparing the options to decide which was most beneficial was something we thought about on virtually every tax return and did the calculations and made claims on a fair proportion of them.

[Deleted User]

Pennywise said:

purdyoaten2 said:

EdSwippet said:

Jeremy535897 said:

Couples with unequal income is one of the most unfair elements of our tax system, easily solved (as in the US) by allowing an election to file jointly, ...

An election would solve it.

Just a note though that this is not what the US has. Rather, if you are married you must file a married status return (typically, but not necessarily, a joint return). And since the allowances and tax brackets for married status returns are in places less than double those for single people, in some cases this leads to a marriage tax penalty. Here, a married couple pay more in tax on the same income than if they were not married and were taxed singly.

Anyone else old enough to remember WEE and separate assessment in the U.K.? 

Yes, I spent a few years working in tax in the 80s and comparing the options to decide which was most beneficial was something we thought about on virtually every tax return and did the calculations and made claims on a fair proportion of them.

Indeed - until that big folder arrived on our desks in 1990 - a guide to Independent taxation!