Family tax
The following sections describe taxes that affect families.
Married couples
For income tax purposes married couples are treated as two separate individuals. Each individual:
- is taxed on their own income
- can claim their own tax allowances
- can pay their own tax through PAYE or directly to the Collector of Taxes
- can receive repayments of overpaid tax.
If you both have the same tax office your affairs will be dealt with separately and in the strictest of confidence.
The married couples allowance is no longer available to those born after 5 April 1935 although everyone is entitled to a personal allowance. The amount is dependent on your age.
Joint income
If you hold any of the following types of income in joint names, you will be treated as if you own it in equal shares. You will be taxed on half of the income each unless your tax office advises you otherwise. You only pay tax on your half if you are liable to tax:
- bank or building society accounts
- shares
- property which you rent out
- any other property which provides income.
Capital Gains Tax (CGT)
For the tax year 1998-99 and later years, you
- are each taxed separately on any gains you make when you sell an asset
- are each entitled to your own annual exempt amount (that is, the gains which you can make without having to pay capital gains tax)
- cannot set your losses against your husband's or wife's gains
- will not be taxed immediately if you transfer an asset to your husband or wife when you are living together. Any gain or loss will be deferred until the husband or wife who receives it disposes of the asset.
If you transfer an asset into joint names prior to disposal you will both be able to make gains up to your annual exemption before Capital Gains Tax becomes payable. The Capital Gains Tax exemption applies to the total gains for a tax year.
Inheritance tax
In general, anything you give your husband or wife during your lifetime or leave in your will is free from inheritance tax. For more information, refer to HM Revenue & Customs Leaflet IHT3 "Inheritance tax. An introduction".
Further details can be found at the HM Revenue & Customs Web site.
This page was last reviewed on 03 April 2006. The information may not reflect changes in legislation made after this date.
This is only a guide to your tax position and should not be relied on in place of professional accounting or tax advice. Any calculated figures are illustrative and are based on the data you provided.
