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Married; 2 incomes; How to assign tax credits

  • 24-05-2020 9:15am
    #1
    Sunrise_Sunset
    Registered Users, Registered Users 2 Posts: 1,215 ✭✭✭


    I'm married and jointly assessed. I've been an SAHM for the past few years but am returning to work soon. Hubbie is in the higher tax band. I'll be in the lower tax band, but earning over the 26,300 standard rate cut off point for a second income.
    What is the best way for us to assign our tax credits? Should he keep all of my tax credits? Or would the difference be refunded with a balancing statement at year end anyway?
    Also, will I be tax free for a while? I have been claiming the Home Carer tax credit up until this point.


Comments

  • #2
    lughildanach
    Registered Users, Registered Users 2 Posts: 150 ✭✭lughildanach


    It shouldn't matter how you assign your tax credits. If your husband is in the higher band with his income alone, and you are on over 26k, all of your tax credits will most likely be used up, regardless of whether they are allocated to you or your husband.

    Depending on when in the year you return to work, your husband may lose the Home Carers Tax Credit for this year. You can keep some of the credit if your income for the tax year is below 10,400 or all of the credit if it is below 7,200. It may be offset by the PAYE credit, which you may not have been getting the benefit of if you had no income from work or social welfare up to this point of the year.

    Due to the PAYE credit you may well be tax free for the first month or so, but if you lose the Home Carer Tax Credit, your husband's tax will increase.


  • #3
    Sunrise_Sunset
    Registered Users, Registered Users 2 Posts: 1,215 ✭✭✭Sunrise_Sunset


    lughildanach wrote: »
    It shouldn't matter how you assign your tax credits. If your husband is in the higher band with his income alone, and you are on over 26k, all of your tax credits will most likely be used up, regardless of whether they are allocated to you or your husband.

    Depending on when in the year you return to work, your husband may lose the Home Carers Tax Credit for this year. You can keep some of the credit if your income for the tax year is below 10,400 or all of the credit if it is below 7,200. It may be offset by the PAYE credit, which you may not have been getting the benefit of if you had no income from work or social welfare up to this point of the year.

    Due to the PAYE credit you may well be tax free for the first month or so, but if you lose the Home Carer Tax Credit, your husband's tax will increase.

    Thank you for the response.
    I could be returning to work next month so will have the latter half of this year in employment. My gross would be over 10,400, but I'm not sure about net. Would that be based on gross pay? I believe the tax credits for Home Carer is 1600 and PAYE credit is 1650, so about the same. Hopefully they could offset each other as you say.


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