PAYE/Personal/SRCOP

N

newkie

Guest
This is a similar question to another thread asking about how to split allowances between myself and my spouse. I recently got my PINs and have logged in to PAYE online to adjust my credits.

I can grasp SRCOP, my wife works part time so it made sense to split this so that she took the minimum, 25K, allowing my cut-off to be up to 43K.

But I have no clue about the PAYE and Personal credits. What is the benefit of them and how best to split them?
 
Whoops, wrong forum. Sorry about that. The good news is I think I've figured this out.

So credits are just a standard deduction. I earn 49K and my wife earns 12K (part-time). Our SRCOP are 43K and 25K (the min) respectively. The €1760 in credits I take from my wife are deducted from my 49K so that money isn't taxed at the higher rate. Instead, as my wife has lost them but is well below her SRCOP, the €1760 is taxed at the standard rate. Collectively this puts €387 in our pockets.

Did I get it right?
 
I'm not sure that you understand credits. Your income is taxed at 20% on the amount of your standard rate band and 41% on the rest. From the resulting "gross tax" figure you subtract any tax credits to get the "net tax" figure which is what you actually pay. You seem to be suggesting that your credit amounts are taxed at 20% - this is wrong.
 
OK, let me try this again and then I will admit I am completely confused.

Say I'm single, earn 20K and have 2000 credits... aren't those credits just deducted meaning I'm taxed 20% on 18K?
 
The credits are against your tax, not your income.
So in your example, the 20K would be taxed at 20% = 4,000 tax from which you subtract the 2,000 credits leaving 2,000 tax due
 
Ahhh... penny drops. Thanks Berni!

Really I'm just trying to figure out what credits to steal from my wife :D

So if my wife has more credits than she pays in tax, that's when it makes sense to shift them to myself???
 
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