Assessable Spouse

smileyj

Ok, here we go.

IF I have no income except for rental profit of 10k, my husband is on the higher tax bracket. Is the 10k (house is solely in my name) assessed on both of us at 41% or is it on me at 20% or split evenly, basically is it considered my earnings. We are jointly assessed. If I earned 10k from a job it would be at 20% but is rental income assumed combined as we are married. As a follow on I presume if the house was in both names it would be split or in his name at the 41%

Any advice is appreciated.

Mr. Incognito

This is your second thread on this topic. I suggest you keep all your queries in the one thread.

I dealt with this query yesterday but I'll explain it to you in detail as you obviously don't understand.

You are jointly assessed. That means for tax purposes your income is joint. All you income, regardless of which spouse it "belongs" to is deemed to be income of the assessable spouse.

If I earned 10k from a job it would be at 20%

Your standard rate cut off point increases accordingly. There is no longer your income and his income from employment- it is lumped together and the increased standard rate applies, whatever is up to the standard rate band is 20% and anything above is 41% so it's incorrect to assume that your 10K is only taxed at 20%, if your husband has income of 60K say then the 70K is taxed at the appropriate rates, not 20% for you and 41% for him.

Your rental income is treated the same way. You do a case V rental computation, basically rent received less allowable expenses and it is "added on" to your PAYE employment income, your husbands and taxed accordingly.

so if you have 10K of rental income, that goes onto your husbands 60K and we tax the 70K in much the same way (though you've no SRCO) as if it was employment income, 20% up to the standard rate cut off point and 41% on the rest.

And before you ask, you can fill all the details in a Form 12. Put in your husbands emplyment income, put your rental income received in the appropriate section and file it accordingly.

Also if you are thinking or renting out a property it is a legal obligation to register with the PRTB. Just a sidenote.

smileyj

I do appreciate your advice, I have read your reply and still don't know the answer, but to put it easier for you to understand, will the SRCOP of the assessable spouse increase by the 10k , so in effect it is taxed at 20%.

Take it very simply , (a) Husband earnings 60k, he is taxed on this income.
(b) a, but then Wife rents house and gets rental profit of 10k (house in her name), will the tax of the 2 of them go up by 4100 or 2000.

the options are

(a) 4100 or
(b) 2000

I appreciate that legally nobody will be held to their response but appreciate anyone who wants to answer.

Mr. Incognito

You are still seperating this income. There is no such thing as taxing the rental income at a rate or either 20% or 41%.

You are taxing ALL the income together, at once from ALL sources.

Yes the assessable spouces SRCO will increase by the 10K so taking 2008 rates for example if the husband has 60K

54,400 @ 20% = 10,880
15,600@ 41% = 6,396

Then you deduct credits as entitled.

The effective tax rate from all sources is actually 24.68% for BOTH rental income and emplyment income then.

I can see where you're trying to come from, sure if my husband is taxed at source don't I only pay the difference at 20% or 41% to Revenue. It doesn't work like that. You'll need to sit down, do the return, do the calcs and see what the final tax bill is going to be. As an aside if you increase the SRCO you are not entitled to claim a home carer's credit so you ned to take this into consideration when claiming the increased SRCO. There is an element of flexibility there in that you can claim either/or whichever is more beneficial.

Now this is far beyond a general enquiry / discussion wchih is what this forum is for. I'm going to have to ask you to seek professional guidance as you are having a hard time grasping the concepts here and you're better off than making a hames of it and having to pay penalties and interest.

smileyj

why don't you answer the question, I found it in the middle of this 2nd reply,

''Yes the assessable spouces SRCO will increase by the 10K.''


I'm surprised you didn't explain the difference between the african and indian elephant as well,

You are right that I should seek professional advice but if you were the professional offering the advice I wouldn't want to be paying by the word.

If you are going to be cocky replying to people with queries you should read the query carefully before answering. People want advice not to be talked down too.

Mr. Incognito

You have already rubbed people the wrong way in your other thread.

After receiving free advice that I'd charge a few hundred for in normal circumstances but I understand some people cannot afford so they come here you have once again decided to take an indignant tone.

You are not entitled to ask any specific questions nor are you entitled to any specific answers.

If I come across as cocky, I apologise. You come across as someone who believes they are entitled to an answer and then lacks the requisite faculty to process it once it has been received.

You asked for advice, for free. You got it. You won't be getting anymore. I hope someone with more manners that finds it here finds it useful.

smileyj

The only advice I got from you was your quote at the bottom.

kluivert

I will not accept personal exchanges on this forum.

Smiley - your question was correctly answered in the first reply - you have been warned.

In summary:

As you are jointly assessed, income from both spouses in added together.

There are a number of types of income

Paye
Self employed
Rental
Investment
Any other type (Loyalities etc)

Add all these together.

Now tax it.

As you guys are jointly assessed, you guys are treated as a married couple and the standard cut off rate which is 45400 for one income source (either you or your other half).

This standard rate of 45400 increases by a maximum of 27400 to 72800 if the other spouse has income to cover this. In your case, it is increased is by 10000 as you only have 10000 to increase the standard tax band from your rental profit/income.

Your standard tax band is 45.4 + 10 = 55.4 @ 20% Balance @ 41%

If your income from rental was say 40000, your standard tax band can only be increased by 27400 to 72800.

Therefore it would be 72800 @ 20% Balance @ 41%.

Hope this helps.

smileyj

Thanks Kliuvert, very clear, I think Incognito is thick skinned enough.

Appreciate your help.

Just as a follow up to this if the house was in my husbands name, then it would be taxed at the higher rate effectively,so is it ok to have it transfered into my name to save taxes,or is this considered a contrived transaction.

Thanks again.

kluivert

smileyj wrote: »

Thanks Kliuvert, very clear, I think Incognito is thick skinned enough.

Appreciate your help.

Just as a follow up to this if the house was in my husbands name, then it would be taxed at the higher rate effectively,so is it ok to have it transfered into my name to save taxes,or is this considered a contrived transaction.

Thanks again.

I asked you not to make insulting references to/about other members of boards.

Last warning