Couples - Good Time for a Spring Clean?

With the 5 April deadline approaching, now is a good time of year for married couples and civil partners to think about rearranging their finances in the most tax efficient manner. Easy options to consider are as follows:

Personal allowance – where possible, rearrange income so that both spouses utilise their allowance, which is increasing from £11,000 to £11,500 in April 2017. Where one spouse does not use the whole of their personal allowance, there is scope to transfer up to £1,100 to their spouse, if they are a basic rate taxpayer, potentially saving tax of £220.

Savings allowance – the first £500 of savings income, such as bank interest, is tax free with any above that rate taxable at normal income tax rates. Couples in receipt of significant savings income should consider reorganising accounts so that each takes advantage of this allowance.

Capital gains tax  (CGT)– each person is entitled to a tax free annual allowance of £11,100. Higher rate tax payers are then charged 10% more than basic rate taxpayers on any gains in excess of this. Prior to disposing of any assets, such as an investment property, consideration should be given to reallocating the ownership to take advantage of each person’s individual allowance and the differing tax rates.

Dividends – the first £5,000 of dividends per year is tax free. Couples should consider reallocating shares to take advantage of the full individual allowance.

Lentells are able to advise couples on all aspects of tax planning, please contact us for more information.