Income tax saving opportunities

Switching income from one spouse or partner to the other can help save tax.

Everyone should make sure they use their personal allowance (a maximum of £12,570 in 2023/24, and frozen at this level until 2027/28).

For couples, if either spouse or a civil partner will not be able to use their personal allowance for 2023/24, then claiming the marriage allowance will save the other spouse or civil partner up to £252 in tax. However, a claim can only be made if the recipient does not pay tax above the basic rate. Claims can be backdated for four tax years, so the advantage of making a claim by 5 April 2024 is the inclusion of 2019/20. Also, try to minimise any higher and additional (top) rate tax.

  • Income over £125,140 is currently taxed at 45%, or 47% for non-savings, non-dividend income in Scotland.
  • The personal allowance is withdrawn where income (less certain deductions) is more than £100,000.
  • You might be able to reorganise both your financial affairs to avoid exceeding one of these limits. However, capital gains tax (CGT) may be payable on switching ownership of an investment if you are not married or in a civil partnership.

You can each receive £1,000 of dividends tax-free in 2023/24 regardless of your tax status. Reorganising your shareholdings between you may make better use of this limit, which will be reduced to £500 next year. You can also receive £1,000 of savings income tax-free if you are a basic rate taxpayer, and £500 if paying tax at the higher rate.

If you or your partner have little or no earnings or pension income, you might also benefit from a 0% tax rate on up to a further £5,000 of savings income. Again, shifting assets between you can help minimise tax on your savings income. A £1,000 tax-free allowance is available for income from property, such as where a parking space is let out, so joint ownership could result in a modest tax saving.

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