Single Person Child Carer Credit-Should parent with higher salary be assigned credit?

[coloc]

I've a query on the Single Person Child carer tax credit.
I know that this new credit is only allocated to one of the 2 seperated parents.
I also know this is usually given to the mother (primary claimant) but she can relinquish to the father.

Question 1. In the case where the mother and father are both working but the father is on a higher salary, is there more to be gained financially if the credit is reassigned to the father by the mother?

Eg: Mother salary of 36k. Father salary of 43k.

Question 2. OR is there a cap of how much can be gained using this credit, and the father or mother would get the same tax saving, regardless of their salaries.

I've seen where mother relinquishes the credit to father because he's working, and she isnt' , so she cannot avail of the credit.
However, have not found advice, or a case online showing where both parents work, and what is the optimal setup if any?

Thanks.

 

[Sophrosyne]

Using the figures you provided and assuming both parties are otherwise entitled to just the Single Personal and PAYE credits, if the Single Person Child Carer credit were transferred to the father the overall gain would be €168 per annum.

The gain arises because the mother would not have sufficient income (€36,000) to take full advantage of the 4,000 increase in the 20% rate band – i.e. increased from €32,800 to €36,800.

The gain is €800 @ 21% (41% - 20%).

However, it is not a great idea to switch in the middle of a tax year as only one of you can have the credit for a year.

Better to transfer from January 1st.

The father’s entitlement to other tax credits would, of course, alter the situation.

 

[coloc]

That is very clear information, which you've illustrated very well for me.

Much appreciated.Thank you.

 

[ironman]

If the mother earns €36,000 the credit is worth €45 a week to her. So would she be prepared to pay that extra in tax every week so you can claim the credit which would be worth an extra €3 each week to you? How much maintenance do you pay? IF her income is reduced by €45 every week because she relinquished credit to you she could claim more maintenance from you. I think it is only beneficial to relinquish the credit to the secondary claimant when the primary claimant does not work or does not pay tax.