Permit Transfer of Whole Income Tax Allowance Between Spouses/Civil Partners

Written by Karen Bryan

British Pound (£) coinsFrom 6 April 2015 married couples and civil partners will be able to transfer £1,000 of their personal income tax allowance to their spouse/partner. I think that the Government should go further and allow the transfer of the whole personal allowance.

From 6 April 2013, the basic income tax personal allowance will be £9,440, meaning that if your income from all sources is under £9,440 you will pay no income tax. Now if one person in a couple doesn’t use their full personal tax allowance, e.g. stays at home to look after the kids, why shouldn’t they be able to transfer their tax free allowance to their working spouse/partner? This policy would give an additional £1,888 in income to a couple where one earned at least £18,880 (gross) and the other had no income. The current proposal of permitting a transfer of only £1,000 of tax free allowance would result in a paltry £200 increase in income. Why bother?

I can’t understand why any unused personal Inheritance Tax threshold, currently standing at £325,000, can be transferred from a deceased spouse or civil partner to the surviving partner, but the income tax personal allowance can’t be transferred between living spouses/partners.