Jennifer and Martin are married. They do not have any children. They have chosen to be separately assessed.
In 2020 Jennifer’s total income is her employment income of €45,000. Her husband Martin has investment income of €26,000.
As they are taxed as single people, the first €34,550 of their income taxed at the standard rate of 20%. Any income above this limit is taxed at the higher rate band 40%.
Jennifer’s 2020 Tax Credits
Credits | Amounts |
Single Person Tax Credit |
€1,650 |
Employee PAYE Tax Credit |
€1,650 |
Total |
€3,300 |
Jennifer's 2020 Income Tax liability
|
Values | Amounts |
Total income |
|
€45,000 |
Income taxed @ 20% |
€35,300 |
€7,060 |
Income taxed @ 40% |
€9,700 |
€3,880 |
Total Income Tax |
|
€10,940 |
Less credits |
|
€3,300 |
Tax payable |
|
€7,640 |
Martin’s 2020 Income tax liability
|
Values | Amounts |
Total income |
|
€26,000 |
Income taxed @ 20% |
€26,000 |
€5,200 |
Total Income Tax |
|
€5,200 |
Less credits |
|
€1,650 |
Tax payable |
|
€3,550 |
Their combined payable tax in 2020 is €11,190 (€7,640 + €3,550).
As Martin’s income was less than €35,300, he will have €9,300 of his standard tax band unused (€35,300 – €26,000). He can transfer his unused standard rate band of €9,300 to Jennifer.
If Jennifer was jointly assessed, as the assessable spouse the first €44,600 of her income could be taxed at 20%. Jennifer can accept up to €9,300 (€44,600 - €35,300) of Martin’s unused standard rate band.
Jennifer can recalculate her 2020 income tax with Martin’s unused standard rate band.
Jennifer’s 2020 Tax Credits
Credits | Amounts |
Single Person Tax Credit |
€1,650 |
Employee PAYE Tax Credit |
€1,650 |
Total |
€3,300 |
Martin’s 2020 Tax Credits
Credits | Amounts |
Single Person Tax Credit |
€1,650 |
Total |
€1,650 |
Jennifer's recalculated 2020 income tax liability
|
Values | Amounts |
Total income |
|
€45,000 |
Income taxed @ 20% |
€44,600 |
€8,920 |
Income taxed @ 40% |
€400 |
€160 |
Total Income Tax |
|
€9,080 |
Less credits |
|
€3,300 |
Tax payable |
|
€5,780 |
Their revised combined payable tax in 2020 is €9,330 (€5,780 + €3,550).
Jennifer and Martin transfer the rate bands by completing an Income Tax Return (Form 12) online using myAccount.