Couples State pensions and income tax - if one person gets additional pension for their partner who has no ..

Question

income, and the additional amount takes him into the next tax bracket.Can the tax allowance be shared between the couple, in order to use her tax allowance as well?

Answer 1

If they are getting the married couple personal allowance for tax purposes then it is a joint allowance so no they can't transfer one to the other

Answer 2

No.  It is all taxable on the person to whom it is paid.  The wife's tax allowance can only be used against a pension paid in her own right, not against the first person's additional pension for a dependent.

Answer 3

I don't think anyone has answered what you really need to know, the previous answers mix up tax and pension allowances.

It depends on the ages of the partners. If a man is over 65, and his wife over 60, they will each get pension, hers either being the reduced married women's amount, or a state pension in her own right, depending on what contributions she has made. Each person has the amount of state pension against their personal tax allowance.

If the husband is over 65, and the wife under 60, he gets an adult dependency allowance for her, she gets no pension. That counts towards his tax situation only, even if it does take him into higher rate, and would also reduce his age tax allowance. When the wife becomes 60, his pension is reduced, hers starts, and then the extra becomes taxable against the wife. That income will no longer be included in the husband's income for tax purposes. If this happens mid-tax year, amounts are proportioned.

There is no provision to transfer personal tax allowances between couples. If the wife's is unused, it is lost, even if the husband's income puts him at Higher Rate. If he has investment income, he can consider putting that in the wife's name if she either pays no tax, or is due at Basic Rate, when he is taxed at Higher Rate.

Only couples with one partner born before 05/04/1935 can claim the married couple's tax allowance. Some or all of that may be transferrable to the wife. If you are in this age group, talk to tax office.

Answer 4

There is no married couples pensions anymore in the UK. Everyone has their own pension paid separately. Accordingly, they are taxed on their individual earnings and not as a couple.

Where I live, if a married women stays at home to look after the family, then her husband gets her tax free allowance added to his. I think that is a great system, but the UK won't adopt that.