Yet more stealth Tax

Oldbiggles

Yet another stealth tax, if you’re in receipt of the Married Couples Allowance.

After querying a reduced tax coding notice with HMRC, I received the following reply.

Quote. “Your tax code has been reduced this year as the 10% lower rate band has been abolished last year; because of this a restriction has been included in your tax code to ensure the Married Couples Allowance is allowable at 20%”.

What idiotic logic to give a Tax Free Allowance and then apply any amount of tax to it?

McKneff

Dont know if Im being stupid or not but bear with me.

In October last year I became 60 (female) and so stopped paying NI.

Doesnt this just mean that there is more money in my salary that attracts tax?

molerat

Yep, I am afraid you are being stupid

Tax and NI are applied to the gross wage less the appropriate allowances. You pay both NI and tax on the same money, for the same pound they take 20% tax and 11% NI, so you are now better off by the amount of NI.

pollypenny

When I turned 60 and stopped paying NI my net salary went up by £300 a month.

margaretclare

Oldbiggles wrote: »

Yet another stealth tax, if you’re in receipt of the Married Couples Allowance.

After querying a reduced tax coding notice with HMRC, I received the following reply.

Quote. “Your tax code has been reduced this year as the 10% lower rate band has been abolished last year; because of this a restriction has been included in your tax code to ensure the Married Couples Allowance is allowable at 20%”.

What idiotic logic to give a Tax Free Allowance and then apply any amount of tax to it?

Do you split the Married Couple's allowance between you, Oldbiggles?

Oldbiggles

margaretclare wrote: »

Do you split the Married Couple's allowance between you, Oldbiggles?

Not much point! My wife is a non tax payer. So no benefit there.

Savvy_Sue

McKneff wrote: »

Dont know if Im being stupid or not but bear with me.

In October last year I became 60 (female) and so stopped paying NI.

Doesnt this just mean that there is more money in my salary that attracts tax?

Remember, there is no such thing as a stupid question. And molerat has eloquently explained what I knew but couldn't have put into words so well.

So, has your take home pay not gone up by any noticeable amount?

jennifernil

Quote. “Your tax code has been reduced this year as the 10% lower rate band has been abolished last year; because of this a restriction has been included in your tax code to ensure the Married Couples Allowance is allowable at 20%”.


[/QUOTE]

What on earth does that actually mean? I cannot make any sense of it.