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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My question is based on what I understand to be the new allowances

Resolved Question:

My question is based on what I understand to be the new allowances following the July Budget. If I have them wrong, please adjust my question accordingly.
My wife and I are both pensioners.
My wife has a fixed pension of £9,000 but I can vary mine at will.
If I draw precisely £42,385 then I will take up all my personal allowance and use up all the 20% rate of tax. Thus £1 extra income would be taxed at 40%.
If my wife transfers £1,080 of her personal allowance to me, does that mean that I can increase my pension to £43,465 before I pay tax at the 40% rate?
Reading the information put out by the Inland Revenue suggests that I cannot have the transfer if my income exceeds £42,385.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Both the person transferring the allowance and the recipient of it should have income within the threshold of basic rate of income tax before transfer of allowance.

More information on this can be found here

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

I hope this is helpful and answers your question.

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