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Nicola-mod, Moderator
Category: Tax
Satisfied Customers: 21
Experience:  Moderator
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For many years my wife and I have submitted seperate tax returns.

Customer Question

For many years my wife and I have submitted seperate tax returns. Things have changed, my wife only has her state pension and less than £1000 in dividend income. So her allowances are essentially unused.
Will we be better off to submit a joint return ?
Wont this make better use of the available allowances ?
Submitted: 4 years ago.
Category: Tax
Expert: replied 4 years ago.
Hello and welcome to the site. Thank you for your question.

Under separate taxation, each taxpayer is treated separately and you can not make a joint tax return and therefore you cannot avail unused personal allowance of your spouse.

Most common reasons for a need to file a tax return are
- you are self employed
- you are a compnay director
- your annual income is £100,000 or more
- you have income from savings, investments or property
- you get income from overseas
- you have capital gains tax to pay

More information on "do you need to complete a tax return" can be found here

From your statement, your wife now has her state pension and less than £1,000 in dividend income. Although state pension is paid gross, it is taxable income.

So her circumstances have changed and it appears she does not meet the criteria set by HMRC for filing a tax return. You should contact Self Assessment helpline and request that she is excused from filing a tax return in future.. Details are here

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 4 years ago.

Yes we made seperate returns because I was self employed for a period. But no longer . merely pensions and div. incopme. Theoretically my wife has £10,ooo of allowances. Cant I access these somehow to reduce my tax burden ?

Expert: replied 4 years ago.
Thank you for your reply.

Your wife gets a state pension ... this is taxable income and she uses her tax free personal allowance against it.

If she were to get pension from previous employments, that too would be taxable and she would use the remainder of her allowance against it.

One way to utilise some unused allowance -
If you are self employed, you could engage your wife to carry out secretarial and administrative tasks on your behalf and make a payment to you on a need basis. She would declare it on your tax return and you would be able to deduct these payments as business expense.

I am not aware of your ages but there is married couple's allowance as long as one spouse is at least 75 years old at some stage in the tax year.

As far as dividend income goes, provided your total taxable income remains within basic rate of tax band, there is no tax on dividends received. They carry a notional tax of 10% and this is credited in the tax calculations.

If you have taxed or untaxed income from savings, you should consider transferring them into her name to enable you to make better use of personal allowances.

There is no way you can access her unused allowance to reduce your tax burden other hand using her services in your business, I'm afraid.

I hope this is helpful and answers your question.
Customer: replied 4 years ago.

I do not think I am asking the right questions.It is not a question of making seperate returns it is a question of trying to reduce tax. My wife is 84, I am 83, we have pensions annuities declining dividend income. She at the moment has £10,000 of unused allowances. Can we somehow use these.

years ago we were bringing up a family the wife did not work we were assessed together. can we go back to that ? would it save us tax ?

Expert: replied 4 years ago.
Please clarify for me

I am sorry to say but you can't go back to those times when you were both assessed together. Under separate taxation of individuals, each person gets his/her own personal allowance and is taxed on income in excess of that allowance. You can't transfer your wife's unused allowance to yourself. These are tax rules. If your wife does not have any income/pension in her own right, then her unused allowance is lost, I'm afraid.

As you are both over the age of 75, you are entitled to married couple's allowance.

I hope this clarifies the point.

Expert:  Nicola-mod replied 4 years ago.

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