Use the allowances available to you
Post Author:
Anne Melville
Date Posted:
February 27, 2019
Share This:
Categories:
Your personal financial plan should ensure that you are making the most of any allowances available to you.
Each individual is entitled to their own personal allowance (PA), which is set at £11,850 in 2018/19. This is due to increase to £12,500 for 2019/20.
As each spouse or civil partner is taxed separately, tax planning involves making best use of the PA; the starting and basic rate tax band; the Savings Allowance; and the Dividend Allowance. The aim is to distribute income within the family to take maximum advantage of these. There is also the possibility of making gifts of assets to distribute income more evenly – but gifts must be outright and unconditional.
Part of the PA can be transferred between spouses and civil partners. The Marriage Allowance of £1,190 for 2018/19 can be transferred, but only where neither spouse/civil partner pays tax at the higher rate. The transferring spouse/civil partner will need to make the election.
