Tax credits transfer

[Dipso2]

Tax credits.
I have rediced my hours working since Sept 2021. I have discovered I am paying 20% tax but am 5700 under the cut off for the 40% tax band. Husband works full time and pays 40% tax.

I wasnt aware i should have gifted these credits to my husband to increase the household income. Not very good with understandig the PAYE tax system as have always been above the 40% threshold in the past.
Now what to do;
1. Gift husband the credits now (have been assessed seperately up to this point) and increase his income by 1200 a yr roughly.

2. Keep my credits and use them by picking up few days a month extar work (this is an option)

3. Use my credits when declaring newly achived rental income (only recieving this since March 2022)
Would all these scenarios work out equal or does one appear more beneficial to the family finances than the others ?

Lower income making things tight for the family so want to make the best decision for us and kids.
Would appreciate ANY advice.

 

[Groucho]

I suspect that you may be confusing your tax credits and your tax band cut-off point.

You can give your husband any unused tax credits that you may have, but you can't give him any unused element of your tax band cut-off point!

Have a look at the footnote to this table:

Tax rates, bands and reliefs

This page shows the tables that show the various tax band and rates together with tax reliefs for the current year and previous four years

www.revenue.ie

 

[Dipso2]

I suspect that you may be confusing your tax credits and your tax band cut-off point.

You can give your husband any unused tax credits that you may have, but you can't give him any unused element of your tax band cut-off point!

Have a look at the footnote to this table:

Tax rates, bands and reliefs

This page shows the tables that show the various tax band and rates together with tax reliefs for the current year and previous four years

www.revenue.ie

Oh!!!!

Had a financial review with a registered financial advisor who stated as I have taxable income of 33000 I could use the difference between that and the 40% cut off point point being around 37000 (ish) to reduce my husbands tax payments. Is he incorrect ?????

 

[AAAContributor]

Is he incorrect ?????

Your adviser is correct.

Assuming you both have a combined income in excess of €73,600 for 2022, then as you are separately assessed, 20% tax is being paid on €69,800 (€36,800 + €33,000) of income when you could be paying 20% on up to €73,600.

Your unused band is €3,800 and your husband can accept up to €9,000 of standard rate band from you (€45,800 - €36,800).

You can transfer €3,800 by completing Form 12 online using myAccount.

See the Jennifer & Martin example here. I think it broadly matches your situation:

Separate assessment

This page outlines separate assessment

www.revenue.ie

 

[Dipso2]

Your adviser is correct.

Assuming you both have a combined income in excess of €73,600 for 2022, then as you are separately assessed, 20% tax is being paid on €69,800 (€36,800 + €33,000) of income when you could be paying 20% on up to €73,600.

Your unused band is €3,800 and your husband can accept up to €9,000 of standard rate band from you (€45,800 - €36,800).

You can transfer €3,800 by completing Form 12 online using myAccount.

See the Jennifer & Martin example here. I think it broadly matches your situation:

Separate assessment

This page outlines separate assessment

www.revenue.ie

Thank you so much!

 

[Groucho]

My bad! I had completely missed the key fact that you were both separately assessed.

Thanks to AAAContributor for picking up on that serious oversight.