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Example 11, (Modified): David and Victoria are married and in 2018/19 David had a trading income of £11,000* and Victoria received a salary of £30,500. CALCULATE THE INCOME TAX LIABILITIES OF DAVID AND VICTORIA ASSUMING AN ELECTION IS MADE TO TRANSFER THE TRANSFERRABLE AMOUNT OF DAVIDS PERSONAL ALLOWANCE TO VICTORIA. *(Note: £11,000 was £8,000 in the original example, the modification was done so that the transferer’s total income is less than the given Personal Allowance (PA) of (£11,850) in 2018/2019 but more than 90% of £11,850). In other words would like to know the tax computation is like when the unused PA is less than 10% of the given PA (£1,190)?
As per the first sentence of the study notes (chapter 2, section 4.1. page 10)
“An election may be made to transfer a FIXED amount of the PA to a spouse or civil partner – the amount is set at £1,190 for 2018/19.”
This would of course then leave David with some taxable income that would be taxed in the normal way.
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