What is an effective tax strategy for couples regarding income tax?

The strategy of jointly owning shares to maximize dividend allowances is particularly effective for couples because it allows them to utilize both individuals' tax allowances and lower tax brackets efficiently. When couples own shares together, they can split dividend income, potentially reducing the overall tax burden. Each individual may qualify for tax-free allowances, such as the dividend allowance, allowing for greater tax-efficient investment income.

This approach can help couples manage their income and make the most of the available tax benefits, which might not be as effective if only one partner holds the investments and is subject to higher tax rates on dividends. Joint ownership can also facilitate better tax planning by increasing flexibility and strategically positioning income across both partners.

In contrast, keeping all investment assets in one name can lead to a higher tax liability on the income generated, especially if that earner is in a higher tax bracket. Transferring income-generating assets to the highest earner does not optimize the tax position and may lead to an unnecessary tax burden. Lastly, investing only in fixed assets does not necessarily minimize tax obligations and could also limit the growth potential and income generation that comes from other types of investments.