By Your Call Publishing | ,

Finance Article - February/March 23

Your Questions Answered by TaxAssist Accountants

Can I reduce my tax if my spouse doesn’t work?

I own a rental property and pay tax on the rental income at the higher rate. My spouse doesn’t pay tax and I was wondering if we could organise our affairs in a way to save tax?

Answer

There are many good reasons why a married couple or civil partners should consider equalising their income, where this is possible and practical.

As well as potentially big differences in tax rates, the tax system works to limit personal allowances and child benefit entitlement for individuals with higher incomes.

As a married couple, it is sensible to consider sharing your income by gifting some or all of any income producing assets you own to your spouse to save tax.

Before doing this, there are a number of legal and practical considerations which need to be considered. You should also be aware that for this to work, a number of conditions need to be satisfied. Generally, your gift must be to your spouse or civil partner from whom you have not separated and be an unconditional gift. Professional advice should always be taken so your individual circumstances can be reviewed.

We work with individuals to provide proactive advice to save tax and if you would like to discuss your tax affairs further, please contact us.

Information supplied by Cheryl Hopkins, Chartered Certified Accountant, TaxAssist Accountants. Advice shared in this article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayers’ circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take, action, as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.