Finance Act 1971

Section 23.

SCHEDULE 4 Separate Taxation of Wife's Earnings

Meaning of wife's earnings

1 References in this Schedule to the wife's earnings are references to any earned income of hers other than—

(a) income arising in respect of any pension, superannuation or other allowance, deferred pay or compensation for loss of office given in respect of the husband's past services in any office or employment; or

(b) any payment on account of an allowance under the Family Allowances Acts 1965 to 1969 or the Family Allowances Acts (Northern Ireland) 1966 to 1969 or any payment or benefit under the National Insurance Acts 1965 to 1970 or the National Insurance Acts (Northern Ireland) 1966 to 1969 which is payable to the wife otherwise than by virtue of her own insurance.

General Rule

2 In charging the income of husband and wife in accordance with section 37 of the Taxes Act (wife's income deemed to be husband's)—

(a) the wife's earnings shall be charged to income tax as if she were a single woman with no other income ; and

(b) the husband's other income shall be charged to income tax as if the wife's earnings were nil.

Personal reliefs

3 (1) Subject to the following provisions of this paragraph, the reliefs to be given under Chapter II of Part I of the Taxes Act (including the deductions from total income to be made for the purposes of surtax under section 28 of that Act) shall be determined as if the husband and the wife were not married and—

(a) any children of his (within the meaning of section 10(1) of the Taxes Act) were his children and not hers ;

(b) the wife's earnings were her only income ; and

(c) the husband's income included all income of the wife's other than her earnings.

(2) Accordingly the reliefs to be given under that Chapter in respect of the income chargeable under either sub-paragraph (a) or sub-paragraph (b) of paragraph 2 above shall not reduce the tax or the income chargeable under the other of those sub-paragraphs.

(3) No relief shall be given either to the husband or to the wife under section 6, 7, 9(2), 9(3), 13 or 14 of the Taxes Act.

(4) References in Chapter II of Part I of the Taxes Act to the claimant shall be construed as including the wife.

Effect of deductions etc.

4 (1) Notwithstanding anything to the contrary in the Income Tax Acts, where any amount is under any provision of those Acts to be deducted from or set off against income in respect of any payments, loss or capital allowance, then—

(a) if under that provision it is (or is in the first instance) to reduce the wife's earned income, or is to be deducted or set off in respect of payments made by her, it shall be treated as reducing her earnings and as not reducing any other income ; and

(b) in any other case it shall be treated as not reducing the wife's earnings.

(2) Sub-paragraph (1) above shall not affect the giving of any relief under section 174 of the Taxes Act (carry-back of terminal losses) for a year of assessment for which no election under section 23 of this Act was in force.

Assessments, recovery and returns

5 Income tax charged on the wife's earnings under paragraph 2(a) above shall, whether or not an application under section 38 of the Taxes Act (separate assessment) is in force, be assessed and recovered as if she were a single woman, and any repayment of tax assessed in pursuance of this paragraph shall be made to her.

6 Where an application under section 38(2) of the Taxes Act (separate assessment to surtax) is in force then, in addition to any surtax charged under paragraph 2(a) above, so much of the surtax charged under paragraph 2(b) above as is attributable to any income of the wife's shall be assessed on and recovered from her; and for this purpose—

(a) income other than earned income shall be treated as the highest part of the income charged under paragraph 2(b) above;

(b) if any income so charged is reduced by deductions under section 28 of the Taxes Act, income other than the wife's shall be treated as so reduced before income of the wife's ; and

(c) so much of the surtax so charged as under the preceding provisions of this paragraph is treated as charged in respect of income other than earned income shall be attributable to the husband and the wife in proportion to their respective shares of that income so charged.

7 Where subsection (3) of section 39 of the Taxes Act (separate returns in cases of separate assessment) applies for the purposes of subsection (1) and (2) of that section it shall apply also for the purpose of this Schedule ; but subject thereto nothing in this Schedule or in section 23 of this Act shall be taken to affect the provisions of the [1970 c. 9.] Taxes Management Act 1970 as to returns.

Modifications for 1973-74 and subsequent years

8 In relation to the year 1973-74 and subsequent years of assessment the preceding paragraphs of this Schedule shall apply with the omission of the following:—

(a) in paragraph 3(1), the words “(including the deductions from total income to be made for the purposes of surtax under section 28 of that Act) ” ;

(b) in paragraph 3(3), the references to sections 6, 9(2) and 9(3) of the Taxes Act; and

(c) paragraph 6.