Guide to Marriage Tax Credits in Ireland:
Congratulations! If you’ve recently tied the knot, you may have additional cause for celebration, because you could save up to €4,620 on your tax bill every year, as a married couple. In this article, we run through how to assess yourselves as a married couple; then we examine the kind of savings that can be made through marriage tax credits, before detailing how to apply. Let’s get started.
What are the tax assessment options for married couples?
Joint assessment will be automatically applied by the tax office when you advise them of your marriage. It allows couples to split their tax credits and rate band between both parties. If only one partner has income that is taxable, all tax credits and the standard rate cut-off points will be given to the person receiving the income.
If both of you have taxable income, you can choose which of you is to be the assessable partner – i.e. the person responsible for filing tax returns and then paying any tax due. To confirm which of you is to be the assessable partner, you must complete the Assessable Spouse or Nominated Civil Partner’s election form.
Alternatively, you can send a letter that has been signed by both of you, nominating the assessable partner.
If you register for separate assessment, the tax affairs of each partner are kept separate from one another but some tax credits are divided equally between the two parties. The tax credits that apply include the married or civil partner’s tax credit, age tax credit, blind person’s tax credit and the incapacitated child tax credit.
Employee tax credits (PAYE tax credits), along with any expenses, are allocated to the appropriate partner, but any other tax credits that are unused by one partner can be claimed by the other. The standard cut-off point (up to €42,800) can be transferred to a partner at the end of the tax year.
One last thing to note about separate assessment is that your claim must be made between 1st October of the preceding year and the 31st March in the year of the claim.
Assessment as Separate Treatment
The final option is that you can each be assessed as a single person, which means each being taxed on your own income and receiving the same tax credits and standard cut-off point that would be applied to a single person.
Under this system, each of you will be responsible for paying your own tax, claiming your own tax credits and completing your own individual tax returns. You should also note that one partner cannot claim relief for payments made by the other and you won’t be able to transfer tax credits or the standard rate cut-off point to one another.
What kind of savings can be made?
The primary benefit of joint assessment is the ability to transfer tax bands and credits between partners. This means you can reduce the amount of tax you have to pay at the higher rate, which could be a significant saving. The standard rate cut-off point for married couples is €42,800.
This amount is taxed at 20%, the balance being taxed at 40%. If both partners have income, which is increasingly the case, this standard rate cut-off point can be increased by up to €24,800. Aside from the tax rate cut-off point, the other benefits you can receive from tax credits span several areas of married life.
If one of you is a ‘stay-at-home parent’ and out of work or earning less than €7,200 a year, then your partner can claim extra tax credits that could be worth up to €1,100 every year. This is a benefit often overlooked by a parent on low income or seeking employment.
Some tax credits are worth double when you are married, others stay the same; and this may vary from couple to couple, depending on their individual circumstances.
Untangling the various applicable tax credits and combined allowances may be a little daunting and will certainly prove time-consuming; which is why many couples choose to let dedicated businesses take the hassle out of the process for them.
As a registered Irish Tax Agent, we are happy to help maximise your tax rebate. Simply fill out our short form and we’ll get started on securing your highest possible rebate.
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1. Authorisation to act as agent
I, the undersigned, declare to the Revenue Commissioners of Ireland, that I authorise Irish Tax Rebates to act as my agent with regard to all aspects
of my income tax.
I understand that this agreement will remain in place until such time as either party, the client or the agent, has notified the Revenue Commissioners of Ireland in writing of their wish to cancel this agreement.
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I authorise the transfer of any refund or repayment of PAYE/Income Levy/Universal Social Charge due to me by the Revenue Commissioners by electronic funds transfer to the following bank account which is held by Irish Tax Rebates:
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I understand that any refund made by the Revenue Commissioners to my agent, Irish Tax Rebates, on my behalf is refunded in a similar manner as if same were being refunded directly to me and that once the refund is transferred into the bank account nominated by me I have no further call upon the Revenue Commissioners in respect of same. I understand that Irish Tax Rebates is acting as my agent and is solely responsible to me in respect of any refund received by them on my behalf. I further understand that my agent Irish Tax Rebates is an independent entity and that the Revenue Commissioners make no endorsement of my agent or any such agency and cannot accept any responsibility whatsoever for problems encountered by me in dealing with them. I understand and agree that Irish Tax Rebates will input its own bank account details on the Revenue record for the duration of this mandate and will remove these details on the cessation of the mandate. I confirm that I am aware of, and agree to, the payment of the fees charged by Irish Tax Rebates in respect of the services carried out on my behalf and that this fee will be deducted from any amount refunded by Revenue and that the balance of this amount will be paid to me.
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I understand that Tax law provides for both civil penalties and criminal sanctions for the failure to make a return, the making of a false return, facilitating the making of a false return, or claiming tax credits, allowances or reliefs which are not due. I confirm that I will provide the necessary documentation to Irish Tax Rebates to support any refund, credit claims or claims for allowances and reliefs made to Revenue on my behalf of Irish Tax Rebates. I confirm that I will provide details of all my sources of income to Irish Tax Rebates. I understand thatIrish Tax Rebates is required to retain a copy of all documentation relating to any refund or credit or allowance or relief claimed by the agent on my behalf and that the agent will be required to produce same to Revenue upon request.