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Can Personal Allowance be Transferred in this Case

Transfer of Allowances between Spouses

Wife has no income 2018/19. Husband salary of £64,000. No other taxable income.  Husband higher rate but has made gift aid and pension contributions to extend basic rate so only taxable at the basic rate.

Can wife transfer her part unused persoanl allowance to husband?

 

FA 2014 states that to qualify (ITA 2007 sec 55B "the individual is not, for the tax year, liable to tax at a rate other than the basic rate, the dividend ordinary rate or the starting rate for savings"

I would say that the transfer can take place but IRIS says not!

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22nd May 2019 17:44

In such circumstances CCH software allows the MAT.

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22nd May 2019 22:57

When you say "No other taxable income" do you literally mean the only income declared is employment income of £64,000?

Or is there also some dividends, only taxable at the dividend nil rate?

If so have a look at the updated version of FA2014 where an additional niggle relating to dividend income has been added.

If that applies but dividend income is low it might be possible to juggle how the Personal Allowance is utilised so dividend income is no longer in the higher rate tax band and therefore the Marriage Allowance credit would still be due.

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to Not Anonymous
23rd May 2019 08:22

He does have dividend income of £604 which falls into the nil rate.

I will look at FA2014.

Thank you

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to vinylnobbynobbs
23rd May 2019 12:41

If the dividend allowance didn't exist, at what rate(s) would the dividend income be taxed?

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to emanresu
23rd May 2019 15:05

It would fall to be taxed at 7.5 % so still within the "basic" rate.

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23rd May 2019 13:19

HMRC have problems with this.When you phone up they quote the income level.I pointed out that the legislation does not mention income,just the rate of tax.Supposedly there is a special unit dealing with these cases,thus far they have still to allow the relief at least six months on.
Remember the payments on account fiasco ?How much longer is this level of service going to continue ?

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By Jholm
23rd May 2019 17:26

If you are filing a return, be prepared to do it by paper. I'll put money on them not coping with this

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to Jholm
24th May 2019 08:18

The list gets longer and longer.

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