Marriage Allowance
Comments
-
Call back from HMRC received today.
They confirmed that the Marriage Allowance online system has an error such that if you did choose to NOT transfer your 15/16 allowance (i.e. only transfer your 16/17 allowance) the system erroneously reduced your tax limit for 15/16 too (whilst not even transferring this 15/16 allowance to your partner!!).
No confirmation (my) uniform allowance removal is linked to this error too.
Was told to ignore the request for the £210 from 15/16 and await a further letter.0 -
I think you may need to be a bit careful here.I've just found this
"a spouse or civil partner who is not liable to income tax because their income is below their personal allowance or who is liable to income tax at the basic rate, dividend ordinary rate or the starting rate for savings will be able to elect to transfer £1,050 of their personal allowance to their spouse or civil partner.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293790/TIIN_2518_transferable_tax_allowance_for_married_couples_and_civil_partners.pdf
Perhaps I can use my wife's £1,060 after all?
As I understand it :-
If your wife's total taxable income was less than £15,600 in 2015/16 (£10,600 PA + £5,000 starting rate for savings) then she will not be liable for any tax for that year.
If, however, your wife transfers £1,060 of her PA to you then this tax-free limit will be reduced by £1,060 to just £14,540.
Going over these limits by just £1 will mean your wife will lose the tax relief on the whole £5,000 starting rate for savings and her allowance will be reduced to just the £10,600 / £9,540 Personal Allowance.
Accordingly, your wife could lose £1,000 (tax relief on £5,000) in order to give you an extra £212 (tax relief on £1,060).
My understanding could be incorrect but check before your wife claims MA.
Warning: In the kingdom of the blind, the one-eyed man is king.
0 -
Consumerist wrote: »I think you may need to be a bit careful here.
As I understand it :-
If your wife's total taxable income was less than £15,600 in 2015/16 (£10,600 PA + £5,000 starting rate for savings) then she will not be liable for any tax for that year.
If, however, your wife transfers £1,060 of her PA to you then this tax-free limit will be reduced by £1,060 to just £14,540.
Going over these limits by just £1 will mean your wife will lose the tax relief on the whole £5,000 starting rate for savings and her allowance will be reduced to just the £10,600 / £9,540 Personal Allowance.
Accordingly, your wife could lose £1,000 (tax relief on £5,000) in order to give you an extra £212 (tax relief on £1,060).
Not so. The only thing that reduces the SRA is by how much the Non-Savings Taxable Income exceeds the PA, so a reduced PA due to choosing to donate the MAT will just reduce the SRA by that amount.
Nothing so draconian as you surmise - although the donor's loss of an MAT's-worth of beneficial SRA completely cancels out any benefit of the MAT.
0 -
Well, I'm no expert but the wife's pension income was only £6k so the remainder of her PA + the SRA would be taxed at 0%. If, however, the wife's total taxable income exceeded the £15,600 in the year then she would no longer be on a low income so, I thought, she would lose the SRA altogether.Not so. The only thing that reduces the SRA is by how much the Non-Savings Taxable Income exceeds the PA, so a reduced PA due to choosing to donate the MAT will just reduce the SRA by that amount.
Nothing so draconian as you surmise - although the donor's loss of an MAT's-worth of beneficial SRA completely cancels out any benefit of the MAT.
Is that not so?Warning: In the kingdom of the blind, the one-eyed man is king.
0 -
Just to be clear, my wife's income for 15/16 is approx £10k dividends, £6k pension, £1k interest and £2k other (HL loyalty bonuses).
The dividends are already taxed and this is non-reclaimable
If she still has £9540 PA available (£10,600 - £1,060) that should be sufficient to cover the £9k pension, interest and other income leaving no tax payable.
I think!
It sounds like toe best approach might be for her to register for Marriage Allowance first (i.e. transfer the £1,060 to me, then wait a couple of weeks before doing her Tax Return, then we wait a further couple of weeks before I do mine.0 -
Consumerist wrote: »Well, I'm no expert but the wife's pension income was only £6k so the remainder of her PA + the SRA would be taxed at 0%. If, however, the wife's total taxable income exceeded the £15,600 in the year then she would no longer be on a low income so, I thought, she would lose the SRA altogether.
Is that not so?
The item I criticised in your previous post - and highlighted it to make this obvious - is just wrong. You agree? No-one loses the entire SRA as a result of one extra pound of taxable income.
The current posting of yours contains an error but, even worse, is not unambiguous. The point where you "lose the SRA altogether" is when your Non-Savings (N.B. not total) Taxable Income reaches £15,600 - but the point is that you lose it, step-by-step as the Non-Savings Taxable Income increases above the Personal Allowance. There's no sudden catastrophe as you directly said there would be in your previous post, and as you still seem to be hanging on to in your latest post.0 -
Ok. So a total taxable income of ca. £19k so the SRA wouldn't apply in any case. Without the dividend income that's ca. £9k of other taxable income leaving just about enough to spare for MA.Just to be clear, my wife's income for 15/16 is approx £10k dividends, £6k pension, £1k interest and £2k other (HL loyalty bonuses).
On that basis, you'll save £212 if your wife claims MA.
It looks like a close call depending on the actual numbers but it looks like, as a couple, you'll be better off.Warning: In the kingdom of the blind, the one-eyed man is king.
0 -
Ok. Got that. Thanks. . . - but the point is that you lose it, step-by-step as the Non-Savings Taxable Income increases above the Personal Allowance. There's no sudden catastrophe as you directly said there would be in your previous post, and as you still seem to be hanging on to in your latest post.Warning: In the kingdom of the blind, the one-eyed man is king.
0 -
Consumerist wrote: »Ok. So a total taxable income of ca. £19k so the SRA wouldn't apply in any case. Without the dividend income that's ca. £9k of other taxable income leaving just about enough to spare for MA.
On that basis, you'll save £212 if your wife claims MA.
It looks like a close call depending on the actual numbers but it looks like, as a couple, you'll be better off.
The highlighted statement is STILL wrong. If the total taxable income comprised £10k non-savings and £9k savings then the client would still reap the full benefit of the SRA.
Not even going to start discussing mis-understandings of the MAT until we get past this mind-block of yours 0 -
Thanks for this
I was hoping to be able to transfer Marriage Allowance from my wife who had approx £10k of dividend income last year as well as £6k pension. From what you say that is not allowed.
Boo!Consumerist wrote: »Ok. So a total taxable income of ca. £19k so the SRA wouldn't apply in any case. Without the dividend income that's ca. £9k of other taxable income leaving just about enough to spare for MA.
On that basis, you'll save £212 if your wife claims MA.
It looks like a close call depending on the actual numbers but it looks like, as a couple, you'll be better off.
You are right, it's a close call.
We're still waiting for the HL tax certificate. I'll let you know the outcome.0
Categories
- All Categories
- 343.1K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.6K Spending & Discounts
- 235.1K Work, Benefits & Business
- 607.8K Mortgages, Homes & Bills
- 173K Life & Family
- 247.8K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards