Jennifer and Martin are married. They do not have any children. They have chosen to be separately assessed.
In 2022 Jennifer’s total income is her employment income of €47,000. Her husband Martin has investment income of €26,000.
As they are taxed as single people, the first €36,800 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 2022 Tax Credits
Credits | Amounts |
Single Person Tax Credit |
€1,700 |
Employee PAYE Tax Credit |
€1,700 |
Total |
€3,400 |
Jennifer's 2022 Income Tax liability
|
Values | Amounts |
Total income |
|
€47,000 |
Income taxed @ 20% |
€36,800 |
€7,360 |
Income taxed @ 40% |
€10,200 |
€4,080 |
Total Income Tax |
|
€11,440 |
Less credits |
|
€3,400 |
Tax payable |
|
€8,040 |
Martin’s 2022 Income tax liability
|
Values | Amounts |
Total income |
|
€26,000 |
Income taxed @ 20% |
€26,000 |
€5,200 |
Total Income Tax |
|
€5,200 |
Less credits |
|
€1,700 |
Tax payable |
|
€3,500 |
Their combined payable tax in 2022 is €11,540 (€8,040 + €3,500).
As Martin’s income was less than €36,800, he will have €10,800 of his standard tax band unused (€36,800 – €26,000). He can transfer his unused standard rate band of €10,800 to Jennifer.
If Jennifer was jointly assessed, as the assessable spouse the first €45,800 of her income could be taxed at 20%. Jennifer can accept up to €9,000 (€45,800 - €36,800) of Martin’s unused standard rate band.
Jennifer can recalculate her 2022 income tax with Martin’s unused standard rate band.
Jennifer’s 2022 Tax Credits
Credits | Amounts |
Single Person Tax Credit |
€1,700 |
Employee PAYE Tax Credit |
€1,700 |
Total |
€3,400 |
Martin’s 2022 Tax Credits
Credits | Amounts |
Single Person Tax Credit |
€1,700 |
Total |
€1,700 |
Jennifer's recalculated 2022 income tax liability
|
Values | Amounts |
Total income |
|
€47,000 |
Income taxed @ 20% |
€45,800 |
€9,160 |
Income taxed @ 40% |
€1,200 |
€480 |
Total Income Tax |
|
€9,640 |
Less credits |
|
€3,400 |
Tax payable |
|
€6,240 |
Their revised combined payable tax in 2022 is €9,740 (€6,240 + €3,500).
Jennifer and Martin transfer the rate bands by completing an Income Tax Return (Form 12) online using myAccount.