Which spouse should claim tax credits

The former test has its origins in tax law, whilst the later comes from the social security system. This difference is confirmed in the HMRC compliance manual which is often useful to quote and which states:. Where the claimant says they are separated from their husband or wife you might find it helpful to consider the criteria at CCM but remember the starting point is different. They are to be treated as a married couple unless the evidence shows they are separated and it is likely to be permanent.

It is also worth noting that although the living together test has its origins in the social security system, it is slightly different in that there is no requirement in tax credits that the couple need be part of the same household.

HMRC staff sometimes confuse the two tests, but the legal requirements are very different although some factors may be relevant to both as explained below.

The importance of making the correct claim. Tax credits claimants are often shocked to find just how dire the consequences can be where they have made a claim in the wrong capacity. First, HMRC will stop the incorrect claim. This can be a big blow to a family who have childcare costs to pay or have more than one child. In most cases it is not possible to re-claim in the same capacity as the claim is likely to be picked up by the system and sent to a compliance officer again who is likely to disallow it on the same grounds.

Secondly, HMRC will seek to recover all payments made on the incorrect claim as overpayments and may in some cases choose to charge penalties. They may also decide to go back and revise claims from earlier years so far as within their powers to do so. There are many reasons why people make incorrect claims. Obviously some do so fraudulently, but others are the result of claimants making a genuine mistake e.

Married couples and Civil Partners. Two people who are married or civil partners will always be classed as a couple for tax credits purposes unless:.

The HMRC compliance manual states:. From the date on which a couple marry they will be treated as a married couple for tax credit purposes even if they do not begin living in the same household. They might also have been living as an unmarried couple for tax credit purposes prior to this date.

The first of the two exceptions is fairly straightforward. The second is much more problematic and more frequently used by HMRC when investigating a claim. The starting point if HMRC assert that a couple are separated in circumstances that are likely to be permanent is to ascertain from HMRC whether HMRC are suggesting that there is no separation at all and therefore the question of whether it is likely to be permanent is irrelevant or whether they agree there has been a separation but they believe it to be temporary in nature.

However, whilst this can be a useful aid, caution should be used as the living together test is different for married couples and civil partners to that for couples living together as if married to each other or civil partners of each other. There has been little case law on the issues relevant to married couples and civil partners. It is unlikely that such a reconciliation will occur before the parties have taken steps to deal with the problems that led to the separation in the first place, and have actually begun the process of arranging to live together again.

Living together as a married couple or civil partners. Provincial credits can also be transferred using the provincial schedule 2 of the spouse to whom the unused credits are being transferred. The calculation of any credits being transferred would be done using the forms of the province of the spouse to whom the unused credits are being transferred. Jane lives in BC, and would like to transfer unused age and disability amounts to her husband John, who lives in Alberta.

John would claim the unused amounts by completing Alberta Schedule 2 and the Alberta provincial worksheet, as well as form AB for Jane as if Jane were a resident of Alberta. You'll see that on the provincial Schedule 2 for example, Alberta it indicates "If at the end of the year your spouse or common-law partner was not a resident of Alberta, special rules may apply.

For more information, contact the Canada Revenue Agency. If one of you is residing in another province because of work, it's possible that you both could still be residents of the same province see our article For Which Province do I File a Tax Return? When investments are held in a joint account, the investment income including capital gains should be reported based on the funds contributed to the account by each spouse.

If the funds were provided equally by both spouses, then the investment income would be split equally. This subject is covered in the CRA web page Interest and other investment income line line prior to , under the topic of Bank accounts. In order for the lower income spouse to be able to claim more investment income, finances should be arranged so that the lower income spouse has money to invest. Persons with Disabilities - links to all related information. Marital Status.

When to Update Your Marital Status. I understand eligibility for premium tax credits is based on our household income.

Who counts as being in my household? So, for example, if you get married in , any tax refund due to you will be calculated after 31 December Refunds are normally only due where a couple are taxed at different rates and one spouse could benefit from the unused standard rate cut-off point or for some of the unused tax credits of the other spouse. When you get married it is important to advise the tax office of the date of your marriage.

Civil partners are entitled to the same rights as married couples in financial matters such as tax, inheritance, property, pensions and maintenance if the relationship breaks down.

Your civil partnership does not have to be registered in Ireland. Some legal relationships between same sex couples that are recognised by a foreign state such as marriage, civil union, civil partnership are recognised by the Minister for Justice and Equality. Since the commencement of the Marriage Act on 16 November , no new civil partnerships can be registered unless the couple notified the registrar of their intention to enter a civil partnership before that date.

More information is available in our document about Civil partnership and same-sex couples. For the years following your marriage or civil partnership, there are three options for taxation:. With this option:. To claim assessment as a single person, you will have to contact your tax office. Either spouse or civil partner can make the claim and the option remains until the person who claims it changes their mind.

If you want to claim assessment as a single person, you must apply within the tax year preferably at the start of the year. Choosing to be assessed as a single person when you are married or in a civil partnership is unfavourable in some circumstances. This is mainly because you cannot transfer any unused tax credits or standard rate cut-off point. You cannot claim Home Carer's Tax Credit if your spouse or civil partner is caring for a dependent person and would otherwise qualify for the relief.

Under the separate assessment option, the tax affairs of spouses or civil partners are independent of each other. The difference between separate assessment and assessment as a single person is that some tax credits are divided equally between you under the separate assessment option.