Did you ever think that you’re paying more on taxes then you should? And you’re searching for a way to reduce your taxes then this article is for you.
As we all know about our Personal Tax Allowances but did you know that if you were unemployed or earned less than £12 500 for the current year then you can pass on your Allowance to your partner.
Yes, it’s true, but the Government will only allow you to pass on 10% of your unused allowance.
For a better understanding let me explain with an example, let’s say that your partner is earning 20k per year then according to Personal Tax Allowance he/she will be paying taxes on £7.5k because £12.5k are tax-free but this £7.5k can be further reduced if you transfer your 10% tax-free to your partner. Now, your partner will pay taxes on
£20,000 gross salary
-£12,500 minus their own allowance
-£1,250 minus your 10% transferred allowance
So now tax payable is on 6,250 @ 20% , tax payable is £1 250
Tax payable on original £7,500 would have been £7,500 @ 20% = £1,500
Giving you a Tax Rebate of £250
And the best part, you can claim back for 4 years from HMRC
There are online calculators that will give you an estimate of your Tax Rebate so don’t miss out.