Hello and Happy New Year. May I ask what must to some be a slightly daft question?
My situation is as follows: I am retired and not drawing a personal pension nor State pension yet. I am due to start drawing on my personal pension in April this year (2021). My wife currently works and pays Income Tax at the basic rate via PAYE. She is due to retire and start to draw on her personal pension in April this year.
As I do not pay Income Tax, she has for a little while been able to increase her Personal Allowance from £12,500 to £13,750 as part of my Marriage Allowance transfer and as a consequence, my Personal Allowance has reduced to £11,250.
Can someone tell me what happens where both of us have income that is below the Personal Allowance threshold and where, during these times, neither of us would pay income tax? Do we both effectively have a Personal Allowance of £12,500?
I am trying to enter Personal Allowance figures into a spreadsheet that works out our income and expenditure and ascertains when we would have to start paying Income Tax.
Many thanks.
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