Splitting Bands/Credits between Spouses

[suzie]

Hi,

My spouse and I are jointly assessed. My spouse's income is now entirely from a pension and as such my employment income would now be close to 4 times my spouse's.

Am I right in thinking it makes sense to switch the maximum tax bands onto myself and then allocate any appropriate credits to my spouse so as to limit (as best one can) the tax amount paid on the pension income (purely from a cash flow perspective)?

Would there be anything wrong with this approach, ie we wouldn't be losing out in anyway?

Thanks in advance

S.

 

[Kev S]

Hi Suzie

You are correct in your assertion above. You should allocates just enough tax credits against your spouses pension to cover their tax liability (e.g. If their taxable pension is €230 per week allocate €46 of tax credits and €230 of cut-off per week to them).

Then you should transfer all remaining tax credits and cut-off against your own income.

Also, make sure you or your spouse haven't been over taxed in previous years. You can go back 4 years to claim any tax refund due.