Taxation of married people and civil partners
If you get married, both you and your spouse continue to be treated as single people for tax purposes in that year. If, however, the tax you pay as two single people is greater than the tax that would be payable if you were taxed as a married couple, you can claim the difference. (In other words, you can claim a tax refund). Refunds are only due from the date of marriage and will be calculated after the following 31 December. So, for example, if you get married in 2018, any tax refund due to you will be calculated after 31 December 2018.
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 therefore, it is important to advise the tax office of the date of your marriage. You will also need to quote your own and your spouse's Personal Public Service Number (PPS number).
For the years following your marriage, there are three options for taxation. All of the options and the outcomes of choosing them are outlined below. The three options are:
- Assessment as a single person (i.e. you are both still taxed as single people)
- Separate assessment
- Joint assessment/aggregation.
Taxation of civil partners
Following the commencement of the Marriage Act 2015 on 16 November 2015, civil partnership is no longer available to new couples.
Couples who entered into a civil partnership before the enactment of the Marriage Act 2015 can continue as civil partners. Their rights and obligations are not affected by the Marriage Act 2015 and they can continue to be taxed in the same way as married couples.
Assessment as a single person
Under assessment as a single person, each spouse/civil partner is treated as a single person for tax reasons. With this option:
- Both spouses/civil partners are taxed on their own income
- Both spouses/civil partners get tax credits and the same standard rate cut-off point due to a single person
- Both spouses/civil partners pay their own tax
- Both spouses/civil partners complete their own return of income form and claim their own tax credits. One spouse/civil partner cannot claim relief for payments made by the other. There is no right to transfer tax credits or standard rate cut-off point to each other.
To claim assessment as a single person, you will have to contact your tax office. Either spouse/civil partner can make the claim and the option remains until the person who claims it changes his or her mind. If you wish 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/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/civil partners are independent of each other. The difference between separate assessment and the previous option (assessment as a single person) is that under this option, some tax credits are divided equally between you. These tax credits are:
- Married or Civil Partner's Tax Credit
- Age Tax Credit
- Blind Person's Tax Credit
- Incapacitated Child Tax Credit.
The balance of the tax credits is given to each of you in proportion to the cost borne by you. The Employee Tax Credit (formerly known as the PAYE tax credit) and expenses (if any), are allocated to the appropriate spouse/civil partner. Any tax credits other than the Employee Tax Credit and employment expenses that are unused by one partner can be claimed by the other spouse/civil partner. The tax credits are not usually adjusted until after the end of the tax year.
Any tax credits that are unused (other than the Employee Tax Credit and employment expenses) and the standard rate cut-off point up to €43,550 in 2018 can be transferred to the other spouse/civil partner but only at the end of the tax year. The increase in the standard rate tax band of up to €25,550 in 2018 is not transferable between partners. If you think you have unused tax credits or standard rate cut-off point, contact your tax office for a review after the end of the tax year. Overall, the amount of the tax that is payable under this option (separate assessment) is the same that is payable under the joint assessment option discussed below.
The claim for separate assessment must be between 1 October of the preceding year and the 31 March in the year of the claim. Either spouse or civil partner can request this form of assessment. To withdraw the option, you must contact your tax office. Each spouse or civil partner can complete a separate return of his or her own income.
The joint assessment (or "aggregation") option is usually the most favourable basis of assessment for a married couple or civil partners. This option is automatically given by the tax office when you advise them of your marriage or civil partnership, but this does not prevent you from choosing any of the options examined earlier. Under this option, the tax credits and standard rate cut-off point can be allocated between spouses to suit their own circumstances.
If only one spouse/civil partner has taxable income, all tax credits and the standard rate cut-off point will be given to the spouse/civil partner with the income.
If both of you have taxable income, you can decide which of you is to be the assessable spouse/nominated civil partner. You then ask the tax office to allocate the tax credits and standard rate cut-off point between you in whatever way you wish. (The Employee Tax Credit, employment expenses and the increase in standard rate cut-off point of €25,550 in 2018 are not transferable).
If your tax office does not get a request from you to allocate your tax credits in any particular way, the tax office will normally give all the tax credits (other than the other partner's Employee and expense tax credits) to the spouse/civil partner being assessed. The spouse/civil partner being assessed must complete the return of income for the couple and is chargeable to tax on the joint income of the couple.
If one spouse/civil partner is self-employed, joint assessment can still apply. The flexibility this option brings can be very convenient - especially if one of you pays tax under the PAYE system and the other pays tax under the self-assessment system. Under joint assessment, you let your circumstances determine if most of the tax should be paid under PAYE or in a lump sum on assessment. This is determined by the way in which the tax credits are allocated. If you choose to pay most of your tax under PAYE, the tax credits (apart from the Employee Tax Credit and employment expenses), should be offset against the self-assessment income.
The choice about who becomes the assessable spouse or nominated civil partner is made by both of you. All you need to do is to inform Revenue which of you is to be the assessable spouse or nominated civil partner. If you have not made your nomination, the spouse or civil partner with the higher income in the latest year for which details of both spouses' incomes are known becomes the assessable spouse or nominated civil partner. This person continues to be the assessable spouse/nominated civil partner until both of you jointly elect that the other spouse/civil partner is to be the assessable spouse/nominated civil partner or until either of you opts for either separate assessment or assessment as a single person.
Repayments of tax
Repayments that arise from an end of year review will in general be apportioned and repaid on the basis of the tax paid by each spouse/civil partner.
If both of you are in employment, then a Certificate of Tax Credits is issued to each of you. All of the tax credits and reliefs due to a married couple or civil partners where joint assessment applies are shown on the assessable spouse/nominated civil partner's notice - the amount "allocated to other employments" is also shown. This amount ("allocated to other employments") represents the tax credits that are allocated to the other spouse/civil partner and may also include tax credits that are allocated to a subsidiary employment or pension of either spouse/civil partner.
The standard rate cut-off point for married couples/civil partners is €43,550 in 2018. This amount is taxed at 20% and the balance is taxed at 40%. Where both spouses/civil partners have income, this standard rate cut-off point can be increased by the lower of the following:
- €25,550 in 2018 or
- The amount of the income of the spouse/civil partner with the smaller income.
The increase in the standard rate cut-off point interacts with the Home Carer's Tax Credit. If the increased standard rate cut-off point is more beneficial than the Home Carer's Tax Credit, you can claim the increase instead. As a matter of course, the tax office will grant you whichever is more beneficial to you. More information is available on revenue.ie about the Home Carer's Tax Credit.
How to apply
Joint assessment: to nominate or change the assessable spouse for 2018, you must contact Revenue before 31 March 2018 - see 'Where to apply' below. You can also fill in an Assessable Spouse Election Form (pdf) and send it to Revenue before 31 March 2018.
Separate assessment: to be assessed separately from your spouse in 2018, you must contact Revenue between 1 October 2017 and 31 March 2018 - see 'Where to apply' below.
If you haven't applied for a joint or separate assessment by the dates set by Revenue, you will have to wait until the following year to apply.
Further information about the taxation of married people and civil partners, with examples showing how income is taxed, is available on Revenue's website.