Question about a partner working part time

[CmTaz]

As I understand it ...

A married couple with two incomes have a standard rate cut off 34k each as well as a PAYE credit of 1760 each as per new budget figures and these allowances as well as other credits etc can be transferred among the 2 partners.

If one partner ceases to work the paye credit of the person not working cannot be given to the working partner. Furthermore only 9k of the standard rate cut off can be transferred as the cut off for a single earner in a married couple is 43k.

So what happens if ...
The partner giving up work takes up a nominal employment earning for example 5k a year. Because they are earning in their own right would they be able to give their full 34k standard rate cut off to the main worker and use the PAYE credit to wipe out tax owed on the 5k earnings.
( I am assuming that tax would be applicable as the other partner is earning over the thresholds etc )
Secondly if this employment was in a self employed capacity would that effect the paye credit etc.

Thanks in advance for any help. Much appreciated.

 

[Brendan Burgess]

From [broken link removed] "Taxation of married couples"

Standard rate cut-off point
The Standard Rate Cut-Off Point for married couples for 2006 is €41,000 subject to an increase of up to €23,000 where both spouses are working. The increase is limited to the lower of €23,000 or the amount of the income of the spouse with the smaller income. This increase is not transferable between spouses. The increase in the Standard Rate Cut-Off Point in not allowable where a couple are claiming the
Home Carer’s Tax Credit. However, if the increased Standard Rate Cut-Off Point is more beneficial, you can claim the increased Standard Rate Cut-Off Point instead of the Home Carer’s Tax Credit. In practice your Regional Revenue Office will grant you whichever is the more beneficial.[broken link removed] 'Home Carer's Tax Credit' gives further information and examples to help you calculate which is the most beneficial.
It is very important that you have the correct tax credits and Standard Rate Cut-Off Point otherwise you will not pay the correct amount of tax.
Example:
Helen is the assessable spouse and she earns €43,000 in 2006. Her husband Jim has a Social Welfare pension of €4,500.
Their income is taxable as follows:
Helen €41,000 @ 20%
€2,000 @ 42%
Jim €4500 @20%

 

[Brendan Burgess]

A married couple which is jointly assessed, do not have €34,000 each. They have €43,000 + the other person's income up to a limit of €23,000.

So in your case, you would have a Standard Rate Cut Off point of €43,000 + €5,000.

I don't think that you can transfer your entire cut off point and your paye tax credit to your spouse. He can have €43,000 and she can have up to €23,000.


He gets one employee tax credit and she gets the other.

From IT 1:

The PAYE Tax Credit cannot exceed the individual's PAYE income at the Standard Rate. Any restriction which may arise, will be calculated on review at the end of the year.

So her tax works as follows:

€5,000@ 20% = €1,000
Employee tax credit: €1,000

So €760 of her employee tax credit is unused.

Brendan