Reader’s Question: Can I use my spouse’s unused personal income tax allowance?

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 Reader’s Question:

My 65 yr old husband’s pension is approx £8242 per annum, so he pays no tax. He has approx £1,698 remaining of his personal tax allowance. Can this remainder be transferred to me?

My Answer:

Hi,

 Unfortunately the answer is no.

 As you are aware the personal allowance is the amount of income a person can receive each year without having to pay income tax on it. The level of a personal allowance is dependent on a person’s age and total income in a given tax year. As you state, your husband’s personal allowance is £9,940, but I must point out that is the allowance from April 2011, when allowances are increased. Currently his allowance is £9,490. Personal allowances are a ‘use it or lose it’ tax break, so no inter-spouse transfers are available.

 Obviously you have your own personal income tax allowance which I assume you must be using?

 Another point, you do not state your own age in the question. The reason that I say this is because if you were born before 6th April 1935 you would be entitled to the Married Couple’s Allowance. The age-related Married Couple’s Allowance is an amount that HM Revenue & Customs (HMRC) take off your tax bill (up to £688).

 Thanks for the question and I hope you continue to enjoy reading Money to the Masses. And please tell everyone you know about the site and what I’m trying to do.

 (UPDATE:  I have answered this question on the premise that there are no other assets available, as gleaned from the original email. But as pointed out in the comments below, if other assets are aviable and should your spouse not fully utiliise their personal allowance you could gift income producing assets to them. The spouse can then use their unsused allowance to offset the tax payable on this income. But to reiterate, you are not using their allowance, they are and you will have given away control of an asset. There are advantages and drawbacks to this and the topic is covered fully in my article Money tip #81 – Utilise your family’s annual tax allowances and slash your tax bill)

Best Wishes

(If any other readers have a question they need an answer to then simply ask me via the ‘question box’ to the right)

Image: Filomena Scalise / FreeDigitalPhotos.net


About Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.In 2014, after publishing his first book '30 Day Money Plan - Fix your finances in just 5 minutes a day' Damien quit his day job to focus his efforts on MoneytotheMasses.com

Thoughts on "Reader’s Question: Can I use my spouse’s unused personal income tax allowance?"

  1. K Faulkner February 1, 2011 at 10:43 am

    Whilst you cannot transfer personal allowances between spouses, it may be possible to maximise the use of them by asset sharing. For example if you receive an income from savings or investments that are taking you over your own personal allowance, it may be possible to transfer them into your husband’s name so that the income is not taxed. There may be reasons why this is not advisable, though, so take professional advice before taking any action.