Tax Tips

Marriage Tax Credits: All You Need to Know

Guide to Marriage Tax Credits in Ireland

Congratulations! If you’ve recently tied the knot, you may have additional cause for celebration. As a married couple, you could save up to €5,050 on your tax bill every year. In this article, we explain how to assess yourselves as a married couple. Then we examine the cash savings you make with marriage tax credits, and how to apply. Let’s begin.

Contents

What Are The Tax Assessment Options For Married Couples?
Joint Assessment
Separate Assessment
Assessment as Separate Treatment
What Kind of Savings Can We Make?

What Are The Tax Assessment Options For Married Couples?

Joint Assessment

Joint assessment is 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 earns a taxable income, Revenue assigns all tax credits and the standard rate cut-off points to that person.

If both of you have taxable income, you can choose which of you is to be the assessable partner. That is, 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 Election Form or the Nominated Civil Partner’s Election Form.

Alternatively, you can send a letter to Revenue, signed by both of you, nominating the assessable partner.

Separate Assessment

If you register for a separate assessment, the tax affairs of each partner remain separate from one another. However, the two parties can equally divide some of the tax credits between them.

These tax credits include:

married or civil partner’s tax credit
age tax credit
blind person’s tax credit
incapacitated child tax credit

Employee tax credits (PAYE tax credits), along with any expenses, are allocated to the appropriate partner. However, a partner may claim any other tax credits unused by their partner. The standard cut-off point (up to €45,800) can be transferred to a partner at the end of the tax year. Please note this will increase to €49,000 from 2023 onwards.

Note that for separate assessment, you need to make your claim to be Separately Assessed 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. This means that you are each taxed on your own income. You receive the same tax credits and standard cut-off point that would apply 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. You can change the above assessment by notifying the Revenue that from the current tax year you wish to be Jointly Assessed or Separately Assessed.

What Kind of Savings Can We Make From Marriage Tax Credits?

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 €45,800.

The tax rate for this amount is 20%, with the balance taxed at 40%. If both partners have income, which is increasingly the case, this standard rate cut-off point can increase by up to €27,800. 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’, out of work or earning less than €7,200 a year, then your partner can claim extra tax credits called Home Carers Tax Credit. This could be worth up to €1,600 every year.

Some tax credits double in value for married couples, others stay the same; and this may vary from couple to couple, depending on their individual circumstances.

In Summary

Navigating the various tax credits and combined allowances can be daunting and time-consuming. This is why many couples choose to let dedicated businesses take the hassle out of the process for them.

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to act as my agent in dealing with all aspects of the filing of my Irish income tax return, including the submission of refund or credit claims, allowances or reliefs.

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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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