Transferring Income Tax allowance

TBC15

eskbanker said:

Yes, she still has plenty of headroom to avoid tax even if transferring the marriage allowance to you - she could earn a total of £18,570 on that income mix without doing that or £17,310 if transferring.

Does transferring the marriage allowance have any effect on the 10% CGT rate? ( We live in Scotland)

Dazed_and_C0nfused

TBC15 said:

eskbanker said:

Yes, she still has plenty of headroom to avoid tax even if transferring the marriage allowance to you - she could earn a total of £18,570 on that income mix without doing that or £17,310 if transferring.

Does transferring the marriage allowance have any effect on the 10% CGT rate? ( We live in Scotland)

For the applicant it could do but not for the recipient.

The applicant has a reduced Personal Allowance so may use up more of their basic rate band if their income exceeds their reduced Personal Allowance (the savings starter rate band, savings nil rate band and dividends nil rate band allowance fall within the basic rate band in this situation).

The recipient simply gets a tax reducer worth £252 so it has no impact on them as their Personal Allowance and amount of basic rate band used will be unaffected.

TBC15

Dazed_and_C0nfused said:

TBC15 said:

eskbanker said:

Yes, she still has plenty of headroom to avoid tax even if transferring the marriage allowance to you - she could earn a total of £18,570 on that income mix without doing that or £17,310 if transferring.

Does transferring the marriage allowance have any effect on the 10% CGT rate? ( We live in Scotland)

For the applicant it could do but not for the recipient.

The applicant has a reduced Personal Allowance so may use up more of their basic rate band if their income exceeds their reduced Personal Allowance (the savings starter rate band, savings nil rate band and dividends nil rate band allowance fall within the basic rate band in this situation).

The recipient simply gets a tax reducer worth £252 so it has no impact on them as their Personal Allowance and amount of basic rate band used will be unaffected.

So the transition point to 20% CGT would be £50270 for both?

donny_jim

tigerspill said:

Hi,
I am not sure if I am posting in the right place, but this is one of the forums I regularly use and know there are some very knowledgable people who may be able to help me with a Self Assessment question.

I am a normal basic rate tax payer with some pension income and savings interest.  The savings interest is paid gross so I now have a tax bill.

My wife has no regular income.  However, she took £10,000 of taxable income from her SIPP.  She also earned around £4,700 in interest from savings accounts.  I have just added these details to her Self Assessment for 2023/24 and owes no tax (as expected).

I am not fully sure how the interaction of the tax allowances on savings interest works.  Maybe someone can help explain this in this scenario?

But my main question is it worth transferring the 10% of her tax free allowance (£1,260 I believe) to me?  With the numbers above, would she still pay no tax?  It seems it would save me £252 in income tax with the additional allowance.

I hope this makes sense

I think the answer to your question is yes, if the10k she took from her sip is her only income. (You don’t say if she’s receiving state pension) the £4700 in interest from savings is different, providing she doesn’t pay tax she is allowed to earn approximately £18000 per tax year. I think it works like this £12570 tax allowance. Then non tax payers can earn £1000 tax free savings allowance plus an extra £5000 in savings allowance. To get full details email MSE. His team can explain better than me.

eskbanker

donny_jim said:
I think the answer to your question is yes, if the10k she took from her sip is her only income. (You don’t say if she’s receiving state pension) the £4700 in interest from savings is different, providing she doesn’t pay tax she is allowed to earn approximately £18000 per tax year. I think it works like this £12570 tax allowance. Then non tax payers can earn £1000 tax free savings allowance plus an extra £5000 in savings allowance. To get full details email MSE. His team can explain better than me.

This site doesn't offer some sort of personalised advice service, but instead publishes articles such as this one to explain the answers to frequently-asked questions:

https://www.moneysavingexpert.com/savings/tax-free-savings/

so there's no need to "email MSE" (or indeed any point in doing so) in this sort of situation.