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Dear Sir,
Is my understanding correct that 10% of the PA is a fixed amount and not the maximum amount?
For example 11 of Chapter 2 if we assume for a moment that David had a trading income of £10,000 (instead of £8,000 in the notes) and Victoria received a salary of £30,000.
In this case is it possible for David to transfer the unused PA of £1000 to Victoria or the question of transfer will only arise when the unused PA is greater than or equal to £1100?
Many thanks Sir.
Regards,
NitinThe election is for the fixed amount of 10% – hence 1100 – irrespective of the unused amount!
Are you saying if David had a trading income of £10,000 and Victoria received a salary of £30,000, David can still transfer 1100 of his PA to Victoria?
This would mean that both the partners together will benefit from 22100 PA instead of 22000.
No it would not – look back at the answer to the example and you will see that David will get a PA of 9,900 so will have taxable income of 100 – also note we do not transfer the unused PA – we transfer a tax deduction of 220
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