Briefly: Wives win allowance rights

Click to follow
MARRIED couples can start applying to have half or all of the married couple's allowance transferred to the wife from the next tax year.

The change in the rules on the allowance, currently worth pounds 1,720 for under-65s, comes into effect in April. Couples must complete and return Form 18 before the start of the tax year.

At the moment the allowance is automatically paid to the husband and can only be transferred to the wife if his income is too low to make use of it all.

But from next year the wife has a right to claim half of the allowance, whether the husband agrees on not. With the husband's agreement, the whole allowance can be transferred. Couples who want the whole allowance to continue to be used against the husband's income need take no action.

Where the husband pays tax at a higher rate than his wife, couples will be better off if they do not transfer any of the allowance. If the wife pays tax at a higher rate, they will be better off transferring the whole allowance.

Looking for credit card or current account deals? Search here