Marriage Allowance

dori2o

badmemory wrote: »

Then maybe it is time HMRC produce a booklet called something along the lines of your responibilities & send it to every single tax payer. Unfortunately, most of us pick up our knowledge of tax as we go, if you happen to miss a bit the HMRC seem to delight in charging penalties not for the second infraction which would be understandable but for the first. For something which to a layman can seem totally illogical. Most of us have spent all our working lives on PAYE & a few years ago would never have had to get involved with self assessment just because you get child benefit.

Again, why produce a booklet when all of the information is available online and takes seconds to access.

To send letters and produce material such as booklets costs significant amounts of money, HMRC's budget is reducing year on year which is why everyone should register for the Personal Tax Account as automation and self service will become the norm within the next decade to make sure HMRC can meet the demand with fewer resources (including fewer staff).

dori2o

bob_bank_spanker wrote: »

Is that fair? I don't think HMRC are obliged to give out tax planning advice, and this whole "story" was the result of a FOI request from Royal London - who are obviously keen to create copy. Only about a quarter of people I know who are entitled to claim higher rate relief on their DB pension contributions actually do so, I don't think it's HMRC's place to advise them either.

It's not HMRC's place to provide advice on tax planning, that's for an IFA or accountant to do.

HMRC are merely the collectors of tax, nothing more nothing less.

All of us on PAYE have been mollycoddled for far to long by not having to deal with tax issues because our 'employer does it'.

Things are changing however and people are going to have to have a basic understanding of tax from here on.

Consumerist

polymaff wrote: »

You, included. The recipient's "allowance" - sloppy terminology - does NOT increase one jot.

What took you so long? The usual criticism of other people's attempts but without any detail as to a "correct" explanation.

So where is your explanation, please?

Consumerist

polymaff wrote: »

. . . The recipient's "allowance" - sloppy terminology - does NOT increase one jot.

For the record, from <HMRC>:

Marriage Allowance lets you transfer £1,150 of your Personal Allowance to your husband, wife or civil partner

But polymaff clearly thinks he knows better.

In practice, for the current year your tax codes will change as if your allowances had changed. For previous years, the recipient should get a rebate.

Dazed_and_confused

Polymaff is correct, the applicant loses 10% of their personal allowance but the recipient is not entitled to any additional personal allowance.

HMRC' practice might be to send an amended tax code showing marriage allowance as an extra allowance but when you get to the year end, either with a self assessment return or PAYE calculation, the recipients PA remains the standard amount and they simply get a tax credit deducted from whatever their tax liability is.

It seems to essentially be identical to how Married Couples Allowance works now but with a fixed amount to start with and relief given at 20% not 10%. So for 2016:7 the tax credit would be £220.

For many it won't make a jot of difference but for some it can make a huge difference. Check any clients who have taken State Pension deferral lump sum for example.

Consumerist

Dazed_and_confused wrote: »

. . . For many it won't make a jot of difference but for some it can make a huge difference. Check any clients who have taken State Pension deferral lump sum for example.

Thanks for taking the trouble to explain the detail. My intention was only to explain why the poster had ended up owing tax which they clearly had not expected. I didn't think the minutia would have made things any clearer.

Giving a better explanation is one thing - taking potshots without an explanation is something else.

Dazed_and_confused

I think everyone seems to add confusion with this, BBC have been running stuff this weekend that perpetuates the myth that your income has to be £10,350 or less to apply. No consideration given to the actual legislation or the three 0% rate bands which can, for some (the minority probably), mean you can easily have £20,000 taxable income and apply and as couple you would still benefit if spouse has enough income taxable at basic rate.

To me that goes some way to explaining why there is apparently low take up.

polymaff

Consumerist wrote: »

What took you so long? The usual criticism of other people's attempts but without any detail as to a "correct" explanation.

So where is your explanation, please?

I don't owe you any explanation - and your vulgar responses justify that stance. If you make false statements they will be rebutted by those who know better.

Perish the thought that instead of demanding an explanation you should challenge your own prejudices.

And, as a matter of record, you have, in this thread, had that untruth unmasked and explained as false several times.

badmemory

The problem with advertising campaigns is that the newspapers KEEP printing the wrong information. Last nights BBC original story was completely wrong.

What percentage of the country is actually able to access their personal tax account? Or even for that matter google! Also it is all very well saying things are going to have to change, but if you don't tell anybody that then how do they know. Well until they get the penalty charges anyway.

I also wonder if even as many as 20% of the population knows that there is such a thing as a personal tax account.

polymaff

Dazed_and_confused wrote: »

I think everyone seems to add confusion with this, BBC have been running stuff this weekend that perpetuates the myth that your income has to be £10,350 or less to apply. No consideration given to the actual legislation or the three 0% rate bands which can, for some (the minority probably), mean you can easily have £20,000 taxable income and apply and as couple you would still benefit if spouse has enough income taxable at basic rate.

As I mentioned yesterday, the media tend to quote HMRC advice which is itself hopelessly wrong. Moneybox recently did this over MAT. What is worse, they used an "expert" to validate their errors. It is not then too suprising that those falsehoods propagate further - including on these forums.

You're right to point at the legislation. To have a clear understanding of MAT - or any other related issues - you have to study the legislation. That is not the end of it, though. HMRC have the responsibility of converting the intent of the legislation into working processes. You need to study their processes to decide if each is:

1. what was intended, or,
2. what is not implied but valid, or,
3. what is wrong.

With regard to MAT, HMRC have produced all three classes of process.

A good example of type 2 is the way the recipient receives value. I understand, from HMRC, that they did originally mean to do this as a true transfer of Personal Allowance, but reckoned that it was too difficult to make an unexploitable process and so settle for the clumsier but robust idea of a payment direct to the recipient. Yes, it is a bodge, and like most bodges it will probably bite them back later, but it is definitely type 2 - valid,

The obvious type 3 error is "who is a valid applicant?" HMRC's stance on this also has history. First was, maybe, a mis-reading of the legislation. By the legislation there are two classes of applicant. One class can only apply if taxable income does not exceed their personal allowance, the other class can only apply if they are not classed as higher-rate tax-payers. Has HMRC recognised the two classes? I've asked but got no response.

The other historical, type 3, aspect is the benefit of MAT. At first the people I communicated with within HMRC understood that there could be a benefit to basic-rate taxpayers but that understanding has apparently sunk under the weight of the mis-understanding of the legislation mentioned above - and my, higher-level, contacts opinion that it was OK for some to apply for MAT even though they were basic rate tax-payers seemed to fray into "don't bother - there will be no benefit" and ended up as "you cannot apply".

Dazed_and_confused wrote: »

To me that goes some way to explaining why there is apparently low take up.

Possibly, although the non-appliers are, I would think, predominantly those who don't see/hear/read the misinformation you mention. After the recent Moneybox shambles over these details we discuss here on MSE, Paul Lewis did the make the point - and it is a valid one - that they were receiving lots of messages from listeners who were going to give it a go - and that this was a good thing. How many of those actually did apply, how many of those actually were "permitted" to apply - and how many have nett-benefitted - who knows?