Marriage Allowance

polymaff

Just an aside. The note to the £1,190 states:

"A spouse or civil partner who is not liable to income tax; or not liable at the higher or additional rates, can transfer .. ".

How cack-handedly HMRC finally sort-of admits that they got it wrong in all their advice for over a year....:T

(and STILL haven't got it right ! )

aliS

Hi
I wonder if anyone can explain to me what will happen in this scenario?
My husband is/was self employed, up until January 2016 he was earning in the region of £21,000 per year.
I was employed part time, earning < £6000 a year. In 2016 I became self employed for a few hours a week in addition to my employed work. My income increased to £8000 per year. I also transferred my marriage allowance to my husband.
All was going fine until December 2016 when husband lost his contract and ceased earning. By April 2017 husband was still not working so I increased my self employed hours and applied online for my tax allowance back. I naively assumed I would get it back immediately, when after a couple of months this hadn't happened, I phoned HMRC and was told I would have it back April 2018.
Husband has been signed off work since June with depression & anxiety, he's now claiming ESA. His total earnings for this year are £1400. It's unlikely he'll work anytime soon.
Of course I've increased my self employed hours yet again and now anticipate my 2017/18 income to be in the region of £11,800 . But of course I am still on my reduced tax allowance. I have just paid a balancing payment of £125 . A bit annoying considering this is our worst year ever , income wise, and I'm paying tax!
What will happen in April? Will HMRC ask for more money from m? Or will they take into account husband wasn't earning?
Thank you

Dazed_and_confused

It seems from your post that your hubby would have still benefited from the Marriage Allowance in 2016:17 (it might have cost you £125 but saved him more than that?).

What will happen in April? Will HMRC ask for more money from m? Or will they take into account husband wasn't earning?

Unless he is a higher rate payer (clearly not from your post) what your hubby earns is pretty much irrelevant, you agreed to give away part of your allowance and have now stopped it but the change only takes effect from the start of the next tax year (this appears to be normal looking at the link below).

Your husband could wait until after April 2018 and then apply himself for 2017:18 as a one off,essentially you will get the allowance back just in the form of a tax deduction on your 2017:18 self assessment bill.

Or you could follow the "If your income changes" part of the HMRC guidance here and contact HMRC for their advice?

https://www.gov.uk/marriage-allowance/if-your-circumstances-change

sheramber

https://www.gov.uk/marriage-allowance/if-your-circumstances-change
If your partner asks to stop receiving your allowance, HMRC will backdate the change to the start of the tax year you first started transferring it.

So the husband will lose the marriage allowance for the earlier years.

polymaff

This is HMRC making up on the hoof - again.

The MAT legislation provides no mechanism by which the recipient can reject MAT.

The only one who can cancel it is the party who elects for MAT in the first place:

"(4)An election may be withdrawn only by a notice given by the individual by whom the election was made."

Wibblywobble

My husband transferred the MTA to me in January 2017 but his employed income increased during the year to basic rate. Obviously we are no longer eligible for the MTA. My questions are:
1. Will HMRC automatically remove the MTA from April 2018?
2. Will I have to repay some tax and if I do, will he be able to reclaim some back effectively balancing out the difference?
Thankyou!

Consumerist

Wibblywobble wrote: »

My husband transferred the MTA to me in January 2017 but his employed income increased during the year to basic rate. Obviously we are no longer eligible for the MTA. My questions are:
1. Will HMRC automatically remove the MTA from April 2018?
2. Will I have to repay some tax and if I do, will he be able to reclaim some back effectively balancing out the difference?
Thankyou!

Providing your husband's total taxable income (including such things as savings interest) is below £11,850 there is some tax advantage to be gained between you. If his taxable income is £11,850+ then he will pay more tax and you will pay less tax that if he didn't claim Marriage Allowance. In theory, as a couple, there should be no tax advantage by claiming the allowance in the latter circumstances.

I don't think HMRC will automatically cancel the allowance; either of you can cancel but I understand that it could be effective sooner if the recipient of the transfer cancels.

polymaff

Wibblywobble wrote: »

My husband transferred the MTA to me in January 2017 but his employed income increased during the year to basic rate. Obviously we are no longer eligible for the MTA.

Not true - unless he is now a higher-rate taxpayer and/or non-UK-resident for tax purposes in the relevant tax year.

Adrian_Bower

Hi,

My wife and I have just been told about marriage benefit and are interested in applying. Before we do though, could anyone tell me if getting marriage benefit has a knock on effect to your working tax credits. We don't get much as it is (less than £30 a week), but rely on it to help with our rent, and so are wary of losing out more per year than we'd actually gain, especially from an initial large payout from marriage benefit.

Dazed_and_confused

Tax credits are based on gross/pre-tax income so this should have no bearing on any tax credit entitlement.

But it may affect you if you move onto Universal Credit.

And don't forget there is no "we" with Marriage Allowance. One person, the one willing to give up part of their Personal Allowance, applies and the other gets a bit knocked off their tax bill.