Tax Credit

[onlyonpaper]

My wife gets Disability Benefit of 165.80 per week for a couple of years. All our incomes and tax allowances are on my TFA each year. This year(2006) my tax credits are reduced by 1503 euro to cover the tax on her benefit. However, she is only allowed 1341 euro of a Paye allowance.I have queried it with the local tax office who insist that paye allowance is non transferable so the above is all she is allowed. I dont understand how I can be deducted over 1500 euro whilst her allowance is only 1341. Obviously, I am missing something. Can someone explain please?

 

[noel 2006]

It would appear that you are getting most of your wife's tax credit - personal tax credits are transferable so can be allocated to the person for whom they are of most value. The tax office first calculates the tax due on this payment; in doing so they will take account of your wife's (non tranferable) PAYE credit. The remaining tax due is then deducted from your credits.