family taxation matters Flashcards
what is marriage allowance
Spouses or civil partners can transfer £1,260 of personal allowance.
-Transferer’s PA reduces by £1,260.
-Receiver gets a tax credit of 20% on £1,260 (£252).
-Both must be basic rate taxpayers to qualify.
why would people want to transfer personal allowance
in case one partner has income that is lower than personal allowance, cant use fully
can marriage allowance create a tax refund?
no
if 2 spouses own a jointly owned source of income, how will income be distributed?
general rule is 50/50 regardless of ownership ratio
however an election can be made to distribute according to actual ownership ratio
when would actual ownership ratio distribution be beneficial ?
when the person who has more ownership has a lower tax rate (basic band)
can this election be done for jointly owned bank account creating saving income?
no, always 50/50 for bank accounts
what is the rule of distirbution for dividend income from close company
always divided in actual ownership ratio
CGT implication - disposal of jointly owned property?
general rule: gain will be divided 50:50
election can be made to divide according to actual ownership ratio
election will be favorable when actual ownership of spouse having lower rate of CGT is greater
do children get taxed in UK?
yes same as adults
normal PA and tax bands
however if source of income is transferred by parents (eg. saving account opened by parents and saving income being received) and it creates more than $100 per year then this income will be taxed on parents rather than children
