Fair share for the married woman

MARRIED women who want a share of the married couple's allowance should act before 5 April. This allowance of £1,720 is no longer the exclusive preserve of married men.

A woman can claim half the allowance - and can get the lot if her husband agrees. But while sexual equality is one of the great themes of the times, the allowance goes automatically to the man unless the Inland Revenue is given instructions to the contrary.

To get half or all of the married couple's allowance transferred to the wife for the tax year begining on 6 April, write to the tax office by 5 April. You will then be asked to fill in Form 18. The split or transfer will remain in force for future tax years, too, until the tax office is advised otherwise.

Nowadays the maximum tax saved by the allowance is the same for all taxpayers, regardless of their top rate of tax. In the current tax year the saving is 20p in the pound. This falls to 15p in the pound from 6 April, when the allowance will save £258 over the year (15 per cent of £1,720).

There is usually no overall tax gain in shifting the allowance to the wife, though obviously the wife will have more money in her pocket. Transferring will only make a difference if the husband has insufficient taxable income to make use of the allowance, while the wife does have enough taxable income.

But there could be a cash-flow advantage where one partner is self-employed while the other is taxed under PAYE. The partner taxed under PAYE should get the allowance, in order to benefit from the money sooner.

Tax planning between husband and wife is more likely to make a difference when it comes to investments. If one partner pays a higher marginal rate of tax than the other, or if only one is a non-taxpayer, transferring assets to the lower or non-taxpayer makes sense.

So, for example, a woman may have no income, but she still has her own personal allowance - £3,525 from 6 April. If her husband is a taxpayer, shifting taxable savings accounts and other investments into the wife's name will enable her to set her allowance against the interest or other investment income.

Likewise, husband and wife each have their own capital gains tax exemption of £5,800 in the current tax year and £6,000 from 6 April.

Transferring assets from one partner to the other as appropriate will maximise the combined exemption, worth £12,000.

Where capital gains tax is unavoidable, the taxable gains will be added to the income tax bill and taxed accordingly at 20 per cent, 25 per cent or 40 per cent. Shifting assets to the partner who pays the lowest rate of tax will save money.

But transfer investments between partners well in advance of selling them and actually realising a gain.

A tax inspector could query a sale that follows hot on the heels of a transfer, and might attribute any gain to the partner who was the original owner of the investment.