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Can I use my wife's income tax allowance?

Tax | Income Tax Helpful? 32

Asked by all4love, submitted 29 January 2011.

Open Quote Is it still possible to transfer your wife's unused personal Income Tax allowance to mitigate your own tax liability?

If so could this be changed each year in order to maximise both your own and your wife's allowance and could you please tell me the Income Tax form to complete?
End Quote

Answered by Justin on 31 January 2011

I'm afraid HMRC doesn't allow personal allowances to be transferred between spouses (or anyone else for that matter).

There are exceptions to the above in the case of Blind Person's and Married Couple's Allowances, but these are relatively small and only available to a minority (to qualify for a Married Couple's Allowance one spouse must have been born before 6 April 1935). To transfer these allowances use form 575.

The only way to practically use your wife's personal allowance is to arrange for income to be paid to her and not you, e.g. by holding savings and investments in her name rather than yours. Or, if you run a business, it might be viable to pay your wife a salary if she's able to help out in some way.

If you want to realise capital gains in excess of your annual allowance, currently £10,100, then you can transfer assets to your wife to make use of her allowance too. There's no capital gains tax on transfers between spouses so this is very straightforward to do - it'll simply be treated as having been acquired by your wife for the same amount as you originally paid.

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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Readers' Comments (2) - To post a comment please register or login .

Comment by alanfoster at 6:09am on 01 Feb 2011:

Does this apply to the spouse's element of state pension? I mean, will the amount included for my spouse be deemed to my income..or will it be hers?


Comment by justin at 11:51am on 01 Feb 2011:

All pensions, including the state pension, must be paid to the policyholder (assuming they're still alive). So it's not possible, for example, to arrange for your state pension to be paid to your wife or vice-versa. Any pension paid to your wife will be taxable in her hands, not yours.