From April 2015 it will be possible, in some circumstances, to transfer £1,000 of your personal allowances to your spouse/civil partner. It can only happen if the recipient of the transferred allowance is a basic rate taxpayer and involves both parties making a claim or election.
Claims must be made within 4 years after the end of the tax year of the claim and when a claim has been made it remains in force for later years until a disclaim is notified to HMRC. However, if a claim is made after the relevant year, the claim is for that one year only. We believe it will be most beneficial for the majority of our clients to review the possibility of a claim after the year end on a standalone basis. This will mean we have all the figures to hand so can be confident of whether a claim will be beneficial. For those clients with a spouse receiving a small salary below the level of national insurance contributions, this is unlikely to be worth claiming unless there is other income against which personal allowances can be used.
If the potential donor is a higher rate taxpayer, it goes without saying that the best course of action is likely be to retain the full personal allowance to set against that higher income and take no action in relation to this issue.
We will be reviewing clients’ figures after the end of the first tax year in which the transfer is possible, i.e. from April 2016.