Does Your PAYE Automatically Include Spouse Income?
Does your PAYE automatically include spouse income? Unravel UK tax rules for couples, individual taxation, and how specific allowances apply.
Pay As You Earn (PAYE) is the primary system used by His Majesty’s Revenue and Customs (HMRC) to collect Income Tax and National Insurance contributions directly from employees’ salaries. This system simplifies tax collection by deducting amounts throughout the tax year, rather than requiring a single lump sum payment. This article clarifies how spousal income is treated under the PAYE system, emphasizing that deductions are based on an individual’s earnings and tax code.
Understanding PAYE
The PAYE system operates on an individual basis. Employers calculate and deduct Income Tax and National Insurance contributions directly from an employee’s pay. These deductions are determined by the employee’s specific earnings, assigned tax code, and personal tax allowances. The system spreads an individual’s tax liability across the tax year, which runs from April 6th to April 5th of the following year.
An individual’s PAYE calculation does not automatically incorporate the income of their spouse or civil partner. HMRC provides employers with a tax code for each employee, which guides the amount of tax to be withheld. This ensures each person’s tax obligations are managed separately through their employment.
Individual Taxation
In the United Kingdom, spouses and civil partners are taxed as separate individuals. Each person is entitled to their own Personal Allowance, the amount of income they can earn before tax. For 2024/2025 and 2025/2026, the standard Personal Allowance is £12,570.
Each individual also has their own tax bands, meaning income is taxed at different rates based on how much they earn above their Personal Allowance. One spouse’s income does not influence the other’s PAYE deductions or overall tax calculations. HMRC treats each person’s income and tax liability distinctly, ensuring no automatic aggregation of incomes for standard PAYE purposes.
Marriage Allowance
The Marriage Allowance is a specific exception to individual taxation for eligible married couples and civil partners. This allowance permits one spouse or civil partner to transfer a portion of their unused Personal Allowance to their partner. For 2024/2025 and 2025/2026, this transfer amount is £1,260, which is 10% of the standard Personal Allowance.
To qualify, the transferring partner must have income below the Personal Allowance, typically less than £12,570. The receiving partner must be a basic rate taxpayer, generally earning between £12,571 and £50,270 in England, Wales, and Northern Ireland. This transfer can reduce the recipient’s tax bill by up to £252 in the tax year, as it effectively reduces their taxable income. For example, if the lower earner transfers £1,260, the higher earner’s taxable income is reduced by that amount, leading to a tax saving at the basic rate of 20%.
The partner with the lower income must initiate the claim for the Marriage Allowance. Applications can be made online through the UK government’s GOV.UK website, by phone, or via postal application. Both partners’ National Insurance numbers are required, and the online service may ask for identity verification. Once claimed, the allowance automatically applies to future tax years unless cancelled. Claims can also be backdated for up to four previous tax years, provided the couple met the eligibility criteria for each of those years.