I have a question that transferor is left with less amount then 1260 of personal allowance. So can he transfer the amount e.g. 1200. Or it is must to be atleast left with 1260 to transfer personal allowance to its partner?
Thank you
Ask the Tutor ACCA TX-UK
Transferable amount of personal allowance
Tutor, I discussed this lecture with my friend who has given exam in past. She said that it is not necessary for transferor to give non-tax payer. They might transfer allowance for tax saving.
Yes.
The amount trasnfered must be 10% of allowance - all or nothing. You can transfer it for tax saving purposes.
Can you explain what exactly you mean by 10% of allowance?
Tutor in chapter two, it is clearly said that transferor should be non-tax payer but my friend gave me an example in which tax saving can be done when transferor is a basic rate tax payer. Can you tell me that is it possible of transferable amount of Personal allowance when the transferor is tax payer?
E.g. two partners: James has income of 11500 and Katherine has income of 20000. James has unused personal allowance of 1070 but he can still transfer allowance of 1260 and pay tax on 190 which will be 20% so 38. Is this possible? Because it notes it clearly says tranferor (James in Example) should be non-tax payer but here it is tax payer.
In the tax rates and allowances you will see the transferable amount is £1260 - this figure is given in the exam you do not have to remember it.
Section 4.1 of the ntoes tells you all you need to know about transfering the allowance.
Keep it simple, you are making it too complicated
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