Marriage Allowance

polymaff

zagfles wrote: »

I can't see any changes relevant to this issue.

That doesn't affect the point I'm making.

polymaff

zagfles wrote: »

Interesting, the legislation says nothing about "adjusted net income".

That's probably because the MAT legislation tries to refer to the tax-payer's tax status. That status is defined elsewhere, as is adjusted net income. They relate - but only in conjunction with other tax terms - e.g. Basic Rate Band and Personal Allowances - the latter a composite item, one contributor to which is, confusingly, the Personal Allowance.

Convoluted - but that's legislation / HMRC for you.

zagfles

JimmyTheWig wrote: »

If the lower earner is a tax-payer but pays more into their pension than they pay tax on, what happens?

E.g. They earn £13k, self employed. They pay £5k (gross) into private pension.
They are not a tax payer in the sense that they get more tax credited to their pension than they actually pay.
But they are a tax payer in the sense that they pay tax.
My gut feeling is that they should be able to benefit from this scheme (pension contributions help the higher paid spouse to qualify), but I don't think they will - if their tax free allowance is reduced then the amount of tax they actually pay will increase.

Yes, last bit is right. If they were paying into a net pay scheme where pension is deducted before tax is applied, then they'd benefit, as they're wasting some of their personal allowance. But with a RAS scheme (eg a personal pension) they get tax relief on the whole contribution despite this being more than the tax they paid. So in the scenario you describe there's no point transferring their allowance to their spouse.

polymaff

vacheron wrote: »

Yes, when I asked them what was going on when I first encountered the problem I was told for this they use "adjusted net income" which includes savings income but then does not allow the PSA to be deducted.

... when I then looked at their own page (the one I linked above) it then said you COULD deduct the PSA.

When I called back and queried them on this, the page suddenly changed the very next day" (no updated "last edited" date shown on the page, no page revision history update or anything, just a stealthy edit deleting the ability to deduct the interest PSA!)

This is the kind of sneakiness and non- transparency under which HMRC act (and which seems to have been noticed by quite a few others on the later pages of this thread)!

It takes a VERY long time for HMRC to admit error. The profession has been battering at them for some time to recognise that the more recent "allowances" are really alternate-rate overlay tax bands and so have no influence on that web page.

Incidentally, thank goodness that they are incompetent at, amongst many other things, being sneaky. If they were competent, then when they wiped the reference to the PSA, they would also have erased the document history record:

"4 February 2016 Reference to the Personal Savings Allowance, which comes into effect from 6 April 2016, added. "

:rotfl::rotfl::rotfl::rotfl::rotfl:

zagfles

polymaff wrote: »

That's probably because the MAT legislation tries to refer to the tax-payer's tax status. That status is defined elsewhere, as is adjusted net income. They relate - but only in conjunction with other tax terms - e.g. Basic Rate Band and Personal Allowances - the latter a composite item, one contributor to which is, confusingly, the Personal Allowance.

Convoluted - but that's legislation / HMRC for you.

Didn't George Osbourne set up an Office for Tax Simplification :rotfl:

polymaff

zagfles wrote: »

Didn't George Osbourne set up an Office for Tax Simplification :rotfl:

The road to hell, etc.

Blackavar

Hi. Just jumping onto this thread as it's my topic. First time drawing off a bit of pension pot cash (last tax year) as retired a few years before SP kicks in and had forgotten I'd given wife Marriage allowance to keep her under tax threshold. She is also now retired and earned well under £8K last financial year. So my question is, can I backdate the cancelling of this tax allowance transferance to last financial year as had withdrawn from pot not expecting to pay tax? Yes, I could ask HMRC but tried this and after being on the phone for half an hour, got stuck with the seemingly mandatory voice recognition check/test which I couldn't seem to get past. I'm sure I've read somewhere that you can backdate for up yo 6 years? Any help gladly accepted.

molerat

https://www.gov.uk/marriage-allowance/if-your-circumstances-change
Afraid not, depending on who cancels it you can either run it until the end of this year then end or cancel it from when you first started.

badmemory

Blackavar wrote: »

got stuck with the seemingly mandatory voice recognition check/test which I couldn't seem to get .

Just say no for the three times & then it will let you through, well it has for me 3 times now.



Takes patience of which I have little but did work for me. I really don't want to have to cope with the "our system doesn't recognise your voice" which I can forsee

JimmyTheWig

zagfles wrote: »

Yes, last bit is right. If they were paying into a net pay scheme where pension is deducted before tax is applied, then they'd benefit, as they're wasting some of their personal allowance. But with a RAS scheme (eg a personal pension) they get tax relief on the whole contribution despite this being more than the tax they paid. So in the scenario you describe there's no point transferring their allowance to their spouse.

Thanks zagfles. That's the only way I can see it working, too. Shame.
Seems unfair. But, I guess, we still win with the tax relief added to the pension for money that tax wasn't paid on.