This tax break for married couples

That's what self-assessment is for. In your example, both the husband and wife would submit their individual returns for the previous tax year - one for their self-employed earnings, the other for their PAYE earnings - and anything they were owed in the form of a married couple's allowance would be paid back as a rebate.

ISNT - it would catch up for a SE and an E couple after the first year, the SE person would be a year 'behind' as it were through self-assessment but over time they'd get the same benefits, assuming they do it in a similar way to previously. If they wanted the benefit straight away and SE and E had similar incomes then they could elect for the E spouse to get it all.

It's a 'couples' allowance - when it was last in place the couple could decide how to use it, you were entitled to all of it irrespective of whether you both worked or just one. If one of you works and the other doesn't then generally the working spouse would claim it so they paid less tax (assuming the non-working spouse had no taxable income).

Chil - I still get nightmares about qualifying corporate bonds, and the massive great IHT/CGT questions they threw at you. I think I only passed because I used to pick up the 'easy' marks like addressing the letter properly and making sure I'd dealt with MCA before the complex tax planning bits. Sad though it may be to say it I've also been pondering how the hell they'll restructure/replace PAYE... presumably the starting point will be whichever Big4's turn it is, a fuck load of brown paper, some post it notes and a 'workshop'

Self-employed would presumably add the information 'married' on their self-assessment form. So they don't get the allowance in advance but they get it reimbursed retrospectively, as it were.

@Acekicker... I did the same tax exams, I think. Been trying to think what might usefully replace PAYE, be able to reflect household income but be simpler and more flexible at the same time. Not a clue so far.

I can't remember exactly how they used to know who was entitled, but as regards who gets it, last time around you could 'elect' to give your allowance to your spouse. This could be used for tax planning (or avoidance/evasion depending on what your views are cf other threads!) in that if you had a spouse just over the higher rate tax threshold, you could give them the full allowance and they could then just pay basic rate etc. If you're not employed (and have no significant taxable income) but your spouse is then it certainly used to make sense for the working spouse to get all the allowance.

You tell your tax office the info to work out your tax code, your employers work from that (rather than the other way round) so it can be done (and used to be done) through PAYE.

Looks back not-very-fondly at tax exams with MrA, his wife V, their children C and F and all kinds of complex shuffling around of allowances...mind you we still had MIRAS in the questions then as well, that's one thing they avoid nowadays!

Irritable Duncan Syndrome on Any Questions last night made a reference to a reform of the whole PAYE system coming up in a few years' time. Coincides with the married people's tax allowance in terms of timing. He mentioned that it would make it easier to assess household income - re CB anomaly. PAYE is obviously struggling to keep up with personal taxation - witness the massive adjustment exercise earlier this year. It's too rigid, too slow to respond and doesn't reflect personal circumstances all that well.

I would assume that, as part of that reform, any allowances will apply individually but with the ability to transfer them from non taxpayers to taxpayers as appropriate. I don't see a return to the bad old days when a woman's income and assets were deemed to be her husband's for tax purposes.