It may be hard to believe that there is still a part of the UK where wives must ask permission from their husbands to file independent tax returns. Welcome to Jersey.
The Jersey States Assembly agreed to abolish the archaic rule in early February, reversing a situation whereby only one person in a couple is able to deal with their tax affairs, which must be the husband in a heterosexual couple or the older partner in a same sex or civil partnership who is deemed to be the ‘husband’.
Discussion about changing and updating the rules has been going on for some time. No separate assessment was possible before 2003. A compromise was introduced in 2013 which allows a husband to tick a box on paper or online filing forms, effectively electing separate assessment so that a wife or partner may handle their own taxes directly with Revenue Jersey. Without that permission, only the husband may do so.
Under the measures now adopted, independent taxation will be gradually phased in between 2021 and 2023 for spouses and civil partners.
It’s worth remembering that for the rest of the UK, women’s right to independent taxation was only granted as recently as 1990. Since then, each individual within a marriage or civil partnership has had full autonomy over their income and responsibility for their own taxes using the range of reliefs and allowances available to them.
While separate finances have a raft of advantages, there are also advantages for couples in maximising their allowances to mitigate their overall tax bill. As we move towards the tax year end, don’t forget there are strategies that can help you make the most of your coupled status in tax terms.
- You can transfer a fixed amount of your personal income tax allowance from the lower to the higher taxpayer using the transferable marriage allowance where neither of you pays higher or additional tax rates.
- Where you have joint ownership of assets you should ensure these are arranged in such a way to maximise use of and minimise tax liabilities.
There may be capital gains tax implications when changing ownership of certain assets, so please get in touch for specific advice on this or your year end planning overall.