She can get 40% relief.obviously she is below 40k a year, and pays lower rate of tax. is it advisable for her to start an avc. am I correct in thinking that she would only get 20% tax relief?
thanks for the reply and information. of you could elaborate I'd be obliged. thanksShe can get 40% relief.
You reduce her tax band to 31k, transferring the rest of band to you. Her tax rate of 40% kicks in earlier, but you get more income at 20%.
I can explain better if needed.
that is brilliant information and probably the best explanation of it iv gotten. it makes perfect sense to me now. we will do exactly as u describe with her tax bands and start an avc. thanks@Dublin85
You need to look at this collectively for your joint income. It can cause a bit of confusion if you treat your incomes as 'your money and mine'.
Taking 2023 tax year to start.
A single persons tax band is 40k. Because you are married, and jointly assed, you can split the total (80k) as follows:
Spouse: 31k
You: 49k - this is the maximum you can allocate to you.
The total is still 80k.
Now your spouse income is taxable at 40% for anything over 31k. So she can get 40% relief on any contributions which leave her taxable income not lower than 31k. So if income is 35k, she can get 40% relief on 4k contribution.
2022 is more beneficial, and she can still back date AVCs (until October). She can get 40% relief on anything that leaves her taxable income above 27,800, so if income was 35k, she can get relief on up to 7,200 contribution. You need to look at age related limits and any contributions already being made in calculating the maximum.
I hope this makes more sense?
so we set up the avc and changed the tax bands. she is at 31k and I'm at 49k. I.am just wondering if I may have jumped the gun as she is on maternity leave and will prob be taking 8 weeks unpaid leave at some point this year. I wonder did I make a mistake?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?