I am employed and pay tax on my salary at the basic rate through PAYE. I have no other income and do not complete an annual self-assessment return. My wife works part-time and earns £10,000 per annum and does not pay any tax. Can her personal allowances be transferred to me?
It is possible for a spouse or civil partner who is not liable to income tax or not liable above the basic rate for a tax year to transfer part of their personal allowance to their spouse or civil partner, provided that the recipient of the transfer is not liable to income tax above the basic rate. The transferor’s personal allowance will be reduced by the same amount.
For 2020/21 the amount that can be transferred is £1,250. The person receiving the allowance will be entitled to a reduced income tax liability of up to £250 for 2020/21. Note that married couples or civil partnerships entitled to claim the married couple’s allowance (for people born before 1935) are not, however, entitled to make a transfer.
Eligible couples can backdate their claim for the allowance for up to four years. This means that couples will have until 5 April 2021 to backdate a claim to the 2016/17 tax year.