Revenue - Joint v Separate Assessment

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kinseld5

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I know there are a lot of threads about this already but none seem to answer my question. My wife and I both earn over 55k, so there has not been any benefit to going jointly assessed but she will be going on maternity leave at the end of the year, hence the need to get this sorted. We are currently separately treated as according to revenue we are still single, even though married since 2021.

Comparing jointly assessed with separately assessed, from what i can gather, the former allows for the tax rate bands and credits to be allocated in ROS, i.e. 60/40, but the latter requires the transfer (or claiming back) of any unused credits and rate band differences at the end of the year. In a situation where my wife stops earning money from July 2026 until the end of that year, would the below be correct.

  • Jointly Assessed - a decision could be made to allocate 75% of the total tax credits to myself, and 25% to my wife, effectively ensuring that she gets paid the same monthly wage for those first 6 months, but i'd gain by paying less tax over the 12 months as i'm using a portion of my wife's unused tax credits for each of the 12 months.
  • Separately Assessed - at the end of the year, i would have used all my "single" tax credits but my wife would not have done so, so she would claim back the unused tax credits for the 6 months she was not working, and get tax back
I know that the above example doesn't discuss the rate band cut-off figures, but it seems to me the difference between both options is effectively trying to decide who benefits, i.e. does the husband get the credits and pays less tax throughout the year or does the missus just claim back the unused credits at the end of the year for herself. Am i missing something?

I guess one potential benefit of going jointly assessed is that only one person needs to do the remote working, health expenses claims
 
There can be a tax advantage with joint assessment if one partner is making large pension contributions. (larger than their individual marginal 40% earnings)
 
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I didn't even read your post in full but I can never understand intelligent people who agonise interminably over an issue as clear cut as this.

There is an annual deadline for switching to joint assessment and I think you've missed that, so you may be unable (legitimately at least) to benefit from joint assessment in 2025 which could possibly leave you out of pocket

Otherwise, unless there is some underlying problem threatening your relationship, there is no sense and no advantage in you being separately assessed.
 
T McGibney said:
Otherwise, unless there is some underlying problem threatening your relationship, there is no sense and no advantage in you being separately assessed.
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I think some people are so uptight or controlling over shared finances they want to keep everything separate. Including tax even though it's beneficial and more convenient to be jointly assessed.
 
Bronte said:
I think some people are so uptight or controlling over shared finances they want to keep everything separate. Including tax even though it's beneficial and more convenient to be jointly assessed
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In such cases, there is no point in the couple agonising over the financial merits of the joint option.
 
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Brendan Burgess said:
That is too complicated for this hour of the morning, but is there not a guiding principle?

There is never any tax disadvantage to joint assessment.

In other words, you might not gain anything from joint assessment, but you will never lose out by being jointly assessed.

Separate assessment often leads to more tax being paid.

Brendan
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Happy to be corrected here as I’m trying to figure out a similar issue myself but: Is it not the case that for a couple with two higher-rate taxpayers and no children, who keep separate finances, then once married if assessed jointly all tax credits are allocated to the assessable person / higher earner automatically, resulting in a paycut for the lower earner? And then the couple needs to tinker with tax credits etc. to figure out how to get back to their original paychecks?

I’m also not sure how credits linked to each person’s tax-deductible contributions to pension plans, AVCs, income protection insurance, etc. would be treated but it seems to me that they are also allocated to the higher earner or assessable spouse even though the credit may result from the other spouse’s employment and expenses (I am referring to credits that need to be claimed, not those applied at source via payroll).

Overall not an ideal situation so I am wondering if me and my (soon to be) spouse should request separate assessment or treatment.

PS: I fully understand that to lots of people keeping separate finances seems unreasonable, but it has worked well for me and my partner for over a decade and we don’t want to mess with a good thing. We do have transparency over the other’s situation, decide on financial goals and budgets together, discuss big expenses and agree on pension contributions, but we like feeling independent and getting our own paychecks and having oversight of them.
 
qwerty-2023 said:
PS: I fully understand that to lots of people keeping separate finances seems unreasonable, but it has worked well for me and my partner for over a decade and we don’t want to mess with a good thing. We do have transparency over the other’s situation, decide on financial goals and budgets together, discuss big expenses and agree on pension contributions, but we like feeling independent and getting our own paychecks and having oversight of them.
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I am the same, my husband has 3 children from a previous marriage. I have no kids and we have none together (just Tilly the cat no tax credits for her lol!)

He gets a tax credit for 2 of his children as they have special needs so even if I wanted to be jointly assessed, to keep the peace in the middle east I am out on my own so as not to been seen to be profiting from any tax credit.

I would imagine any self made woman with no children might like to retain some autonomy over her finances. Now of course will need to be revisited later on in the years should one become a carer etc.
 
Tax bands and credits tend to be allocated in an often illogical manner. This can be annoying, but as stated they can be easily changed by an online request.

Problems can arise when either partner is due a tax refund. The refund is given proportionally on the basis of the tax paid by each person. This would result in the lower paying partner having most of their tax refund deposited into the higher payers bank account.

All of this can be easily sorted.
By actively engaging to divide credits and bands the couple would get a better grasp of how the tax system works.

The knowledge gained could be very useful to them in the future and could save them money.
 
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