Are you Married?
It’s well worth knowing what Tax Assessment Basis is – and how this could affect your tax bill / tax refund
In the year you are married, you continue to be taxed as a single person – but you may be due a refund through a Year of Marriage Review.
In the years following Marriage, there are 3 basis of assessment allowed:
- Assessment as a single person (Separate Treatment)
- Separate assessment
- Joint assessment/aggregation.
If you get the assessment basis wrong, this will probably cost you in terms of overpaid tax.
So what’s the Difference?
Joint Assessment: With Joint assessment, your tax credits and tax bands can be shared or allocated between the spouses. So this allows one spouse to allocate some of their tax bands/credits to the other in the current year and back across previous years. or not, as you wish. This is the assessment basis you should use to minimise the tax bill you will have in your current year payslips. It will also ensure your tax for previous years is minimised.
Separate Assessment: This differs from Joint assessment in that your current year tax credits cannot be transferred in any way between the spouses. But you can still review your taxes as a married couple at the end of the year, and if their had been any benefit in transferring tax credits / bands, this will be done automatically.
Assessment as a single person: With this, you will be treated as a single person, so no tax credits or income deductions or tax bands can be shared. Once this basis has been chosen for a year, then you cannot remove it in hindsight. This can adversely affect your tax situation, by amounts in excess of €3,000 p.a.
Which basis to use?
We have seen numerous examples of people overpaying tax by up to €10,000 because they selected the wrong basis of assessment. Our simple advice in this matter is not to choose “Assessment as a single Person” unless you have received professional advice on this matter.
In what circumstances would you choose Assessment as a Single Person? I can’t think of any that are applicable to PAYE – any one aware of an applicable situation, I’d be glad to hear!