Reader Question:
Hi, I am 65 and am receiving around £27,000 from various pensions, my tax allowance is £10,500 which means I pay tax on my pensions. My wife is 60 but does not reach State Retirement Age (SRA) until may 2015 due to the recent changes. Can I utilise any of her unused tax allowance or failing that is she entitled to any benefits until she reaches SRA?
Darren's response:
The simple answer to your query regarding the allowances is that No you cannot transfer your wife's unused allowances. The only allowance currently transferable is the Married couples allowance, which you are too young to be in receipt of. However, if you have savings or investments these could benefit from being transferred into your wife's name.
Currently savings accounts held in your own name, or jointly, will have the interest taxed at source at 20%. For a joint account this will be on half the interest, provided your wife has completed the R85 Tax exemption form. If held in her name only there would be no tax payable until the interest exceeds her tax allowances.
For investments the same could be true, dependant upon what you have. For investments generating capital gain you both have an exemption limit of £10,600, on which you do not pay any tax, so gains should be shared until you have both exceeded this. A large gain above this, held in your own name, could lead to Capital Gains Tax of 28% when added to your existing income level, whereas your wife would likely only pay 18%.
The answer to your second question is not so straightforward.
As you have a household income of £27,000 it is highly probable that you would not qualify for benefits as a household, but in no way is that certain. The benefit system takes into account your own financial circumstances, e.g Disability, financial dependents, income, outgoings etc.
If your wife has recently stopped working, and is still available for work, then she may be entitled to some form of benefit, so it is worth speaking to the JobCentre advisers.
Hope that helps clarify things for you, I'm sorry it isn't the response you hoped for.
Best Wishes
Darren Amos
Financial Planning Designer
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