Transferring shares to spouse's name to avoid income tax on dividends

Scenario: married couple, one earner, paying 41% MTR.

Earner has 3300 married tax credit, plus 1650 PAYE tax credit.

Also Home Carers tax credit in respect of other spouse taking care of child.

Earning spouse owns a few shares, some pay dividends.


Could the shares be transferred into the non-earning spouse's name, and so reduce/avoid income tax on the dividend income?

Can the spouse's unused PAYE tax credit be allocated against the tax due on the dividends?

Protocol said:

Could the shares be transferred into the non-earning spouse's name, and so reduce/avoid income tax on the dividend income?

Click to expand...

Yes

Protocol said:

Can the spouse's unused PAYE tax credit be allocated against the tax due on the dividends?

Click to expand...

No

If no tax credit can be applied, then the tax on the div is reduced from 41 to 20?

But not eliminated?



I think what happens is that the SCROP can be extended by the other spouse's income?

Protocol said:

If no tax credit can be applied, then the tax on the div is reduced from 41 to 20?

But not eliminated?

I think what happens is that the SCROP can be extended by the other spouse's income?

Click to expand...

Yeah that sounds right based on the detail in your OP.

A couple can have either increased SRCOP or home carer's allowance - unless the dividend income is over €4,000 it is not worth arranging for the income to be the non-earning spouse's.