I am sharing with you this month a tax saving strategy that most of my clients are starting to adopt and this is really useful for couples in retirement but can be helpful for young couples with children.

This allowance benefits those who are married or in a civil partnership. If your partner earns less than £11,500 per annum and you earn between £11,501 and £45,000 per annum, it is advisable to make a claim.

This strategy creates a tax saving of £230 per annum.

So here are a couple of case studies to relate too.

• Fred and Ginger are now in retirement.

Fred enjoys a state pension of £8000 per annum and a former employer’s pension scheme income of £10,000 per annum. Ginger only receives her state pension of £6,000 per annum.

By making an application to HMRC, Fred can apply for £1,150 of Ginger’s personal allowance which is added to his personal allowance. This means Fred does not have to pay tax on the first £12,650 on his total income, saving him £230 (£1,150 @ 20%).

The same would apply for a couple with a young family.

• Will and Sarah are in their thirties and have a baby girl aged 1.

Will earns £43,000 per annum; Sarah is at home looking after their daughter but works part-time. Her earning are £9,000 per annum. Will was not aware of this allowance and made a successful application to increase his personal allowance to £12,650.

To assist you further, here is the link to HMRC website – https://www.gov.uk/marriage-allowance

One of my clients recently received £400 from HMRC, as he was able to claim back for the previous tax year. It is such a simple procedure and if you meet the criteria, make the application. Or give me a call for more details.

 

Nigel Taylor Dip PFS

This information is based upon our understanding of the tax rules December 2017.