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Covid 19 payment and TFA

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  • 27-05-2020 10:15am
    #1
    Recliner
    Registered Users Posts: 879 ✭✭✭


    Hi
    Just wondering, my husband is on €350 payment, I've been working as normal. Would I be better off to take his tax credits for the period that he hasn't been working, or leave them to him as he will have to pay tax on this eventually?
    I have no idea about these things at all.


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    #2
    lughildanach
    Registered Users Posts: 150 ✭✭lughildanach


    Recliner wrote: »
    Hi
    Just wondering, my husband is on €350 payment, I've been working as normal. Would I be better off to take his tax credits for the period that he hasn't been working, or leave them to him as he will have to pay tax on this eventually?
    I have no idea about these things at all.

    The 350 is taxable, so if you take his tax credits, although your tax bill will be reduced, he will have to pay the tax. There is no saving to you in the longterm if you do this.

    When/if he goes back to work, he might be as well going to a week 1 basis. If he doesn't do this, then he could end up getting a lot of tax back immediately after he returns, as he will have tax credits he hasn't used, but then he will only have to pay it back later. However, depending on how much tax he was paying beforehand, it might be better for him to stay on a cummulative basis.

    If either of you are in the 40% tax rate, then it might be worthwhile adjusting your tax band allocation to minimise the amount that is being taken at 40%, but if you don't do this, you can always get any refund due at the end of the year. This won't apply if you are both being taxed at 20%


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    #3
    Recliner
    Registered Users Posts: 879 ✭✭✭Recliner


    That makes a lot of sense. He's in the 20% bracket, I'm in the 20% at the moment, but I will go into 40% before the end of the year.
    Thanks for that.


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    #4
    lughildanach
    Registered Users Posts: 150 ✭✭lughildanach


    Recliner wrote: »
    That makes a lot of sense. He's in the 20% bracket, I'm in the 20% at the moment, but I will go into 40% before the end of the year.
    Thanks for that.

    Has your income recently increased? Or is it due to increase in the future?

    If the former, then be careful if considering a switch to a Week 1 basis, as it could bring forward the date you start paying 40%. It won't make any difference in the long run, but you probably don't want any unexpected interruptions in cashflow.


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    #5
    Recliner
    Registered Users Posts: 879 ✭✭✭Recliner


    lughildanach wrote: »
    Has your income recently increased? Or is it due to increase in the future?

    If the former, then be careful if considering a switch to a Week 1 basis, as it could bring forward the date you start paying 40%. It won't make any difference in the long run, but you probably don't want any unexpected interruptions in cashflow.

    I get a mid year bonus, which knocks me into the 40% but it rights itself when I do my taxes in January.


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    #6
    lughildanach
    Registered Users Posts: 150 ✭✭lughildanach


    Recliner wrote: »
    I get a mid year bonus, which knocks me into the 40% but it rights itself when I do my taxes in January.

    If you're going to have an overpayment later in the year, then its probably not worth your while switching to a W1 basis.

    Any underpayment of tax on your husband's 350 can be absorbed by the overpayment later.


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