In such a case the standard rate band will be increased pound for pound of the income of the lower paid spouse up to an amount of 6,000. The Finance Bill has one rather niggly provision that states that where the standard rate band is increased in this way, that increase cannot be taken into account in applying PAYE to the higher paid spouse. In principle this preserves the additional portion of the standard band for the lower paid spouse should that lower paid spouse derive their income from employment rather than from investments. While this has an impact on the couple s cash flow, it does not affect their ultimate tax liability. When that is being assessed on one of the spouses on behalf of both, the addition to the standard rate band is taken into account.
Many couples run a farm, or a shop, or other small business together.
If the enterprise is owned entirely by one of the couple, so that all income from it arises to that spouse, with the other working spouse not in receipt of income in their own right, the couple would not be entitled to the 6,000 increase in the standard band. To get the increase it would be necessary that they formalise the arrangement so as to make both spouses partners sharing in profits, or one spouse an employee of the other, with a salary. It can be foreseen that many couples in this situation will fail to formalise arrangements. It would be surprising if some concession is not introduced in this area and indeed some remarks by the Minister prior to the publication of the Finance Bill would have led to the expectation that some concessions would have been made available. To date however they have not been formalised.