As the end of the tax year approaches it is a good time to check you have used your tax allowances. Enable’s IFAs in Bishops Stortford can help you make sure you have used them all wisely. It is the case in the UK that everyone has a basic personal tax free allowance. This is the amount of money you can earn tax-free each year. You do not normally need to do anything in order to receive this as it should automatically be applied when you are paying tax.
In the tax year 2018/19, the basic personal tax allowance is £11,800. For those aged over 65 this rate is £11,500; over 75 it is £11,500. In some instances, if you are married and have used up your personal allowance, but your partner has not, it may be beneficial to transfer some savings or other assets into their name. The Marriage Allowance (MA) allows a married couple to transfer a proportion of unused tax allowance to the partner who has less income, provided they are a basic-rate taxpayer.
Marriage Allowance came into play in April 2015 – if you haven’t already claimed it then you can backdate it (up to a maximum of 4 years). You can claim Married Couple’s Allowance (MCA) if all of the following apply: you’re married or in a civil partnership, you’re living with your spouse or civil partner, one of you was born before 6 April 1935. If you were married before 5 December 2005, the husband’s income is used to work out MCA. For marriages or civil partnerships after 5 December 2005, it’s the income of the person who earns the most.
Enable’s experienced IFA’s can help you work out if MCA could reduce your tax liability each year if you’re married or in a civil partnership.