Married 2 incomes

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cal2022

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I’ve just recently started a new job after a period unemployed. I also had a few weeks on a short term contract so both when I was unemployed and for the short term contract I left all my tax credits with my husband.

He earns around 45k a year. My new job is paying 25k and I’m trying to work out what our tax home pays will be once I start getting paid.I’ve tried the taxcalc website but not sure it’s giving me the right figures – when I put in my husbands 45 k and mark it as joint assessable with the 25k as second wage then it allows him 6,600 tax credits.I would have thought some of that should have gone towards my income (albeit a small proportion).

So I’m looking for help with the calcs. Would it be more preferential for him to keep the full 6,660 credits , or should we split these?If we opt for joint assessment with the Revenue does that automatically assign the tax credits in the most preferential way or do we need to instruct them as to the exact breakdown we want?

Getting very confused just trying to work out our take home pay. I've looked on the Revenue site but that hasn't really helped clear it up. Shouldn’t be rocket science but now that joint assessment has come into the frame I’m a bit lost!
 
At those levels of income, the only effect the tax credits will have is on the split, i.e. the relative amounts of your take home pay.

So if you take your half of the tax credits then your take home pay will go up by 3300 and his will come down by 3300. No difference to the total.

What would affect the the take home pay is if you don't split the standard rate band correctly. By default you can both earn up to 32,800 before hitting the 41% rate of income tax. Since you will not be using your full 32,800 you can transfer up to 9k of it to your husband. This has the effect of him earning that amount extra before he hits the 41% rate.

So the simplest way to ensure the optimum situation (in cases where each spouse's money is pooled) is:
Tax credits split - make sure that for each individual, tax credit x 5 isn't going to exceed their earnings.
Standard rate band split - if one spouse will be earning over 41,800 allocate the maximum std rate band to them.
 
mandelbrot said:
At those levels of income, the only effect the tax credits will have is on the split, i.e. the relative amounts of your take home pay.

So if you take your half of the tax credits then your take home pay will go up by 3300 and his will come down by 3300. No difference to the total.

What would affect the the take home pay is if you don't split the standard rate band correctly. By default you can both earn up to 32,800 before hitting the 41% rate of income tax. Since you will not be using your full 32,800 you can transfer up to 9k of it to your husband. This has the effect of him earning that amount extra before he hits the 41% rate.

So the simplest way to ensure the optimum situation (in cases where each spouse's money is pooled) is:
Tax credits split - make sure that for each individual, tax credit x 5 isn't going to exceed their earnings.
Standard rate band split - if one spouse will be earning over 41,800 allocate the maximum std rate band to them.
Click to expand...

Thanks Mandelbrot, that makes sense. Thank you.

It probably makes sense for us to each take our own tax credits then but as you say to split the tax band. If we opt for joint assessment from the Revenue will the split happen automatically based on Income or do we need to give them the breakdown of how we want the bands split between us?
 
Thanks! Actually do have a login already so will root that out and have a look. Thank you!
 
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