Marriage Allowance

sheramber

I would wait and see what the personal allowance is for next year which be announced in the Autumn Budget.

An increased allowance may mean it is still to your benefit to transfer the allowance.

Last year I transferred the allowance to my husband which meant I paid £80 tax but my husband paid £230 less tax, so a win overall.

If/when you do cancel the allowance it will continue until the end of that tax year ( following 5 April)

polymaff

MrsH78 wrote: »

Do I need to inform HMRC of this change now? or wait until next April? OR shall I just cancel it? It seems that its neither here nor there now as if I don't do anything my taxable allowance is less so I'll be taxed on more of my wage - albeit - negligible, while my DH carries on with a higher tax code. So someone's paying that tax somewhere. Or am I totally misunderstanding it.

Very, very few people lose due to the MAT so why not let it run?

As for informing, the only reason you'll fall out of MAT will be because either you or your spouse are, or would become as a result of electing for MAT, higher rate tax payers.

I suspect that you are being confused by your income possibly becoming more than your personal allowance? As far as UK-resident taxpayers are concerned, everything HMRC has written about MAT eligibility and the Personal Allowance is just utter, utter, nonsense.

SirJoeh

Johnr1996 wrote: »

Beware when applying for allowance ! My wife doesn't pay tax and we moved her allowance into my tax code !
She received a letter from tax office saying she has to pay £226.80 for tax year 2017/18 !!!!!
I only received £45 rebate on my tax code for that year .
Basically tax office told her , because she moved her allowance into mine it reduces her allowance into the paying income tax bracket ! It doesn't make us better off as a couple and now we have to find £226.80 to pay back to tax office as they won't reverse the claim for last year !

This happened to me also. I think I got 60quid added on to my tax code. I am well over the 11850 that I can earn. My wife last year was well under but due to extra work this year she was only slightly under 11850 so has to pay 236quid back. Hopefully sort itself out come April.

polymaff

Johnr1996 wrote: »

Beware when applying for allowance ! My wife doesn't pay tax and we moved her allowance into my tax code !
She received a letter from tax office saying she has to pay £226.80 for tax year 2017/18 !!!!!
I only received £45 rebate on my tax code for that year .
Basically tax office told her , because she moved her allowance into mine it reduces her allowance into the paying income tax bracket ! It doesn't make us better off as a couple and now we have to find £226.80 to pay back to tax office as they won't reverse the claim for last year !

SirJoeh wrote: »

This happened to me also. I think I got 60quid added on to my tax code. I am well over the 11850 that I can earn. My wife last year was well under but due to extra work this year she was only slightly under 11850 so has to pay 236quid back. Hopefully sort itself out come April.

I doubt that either of these cases are due to MAT alone - but reflect other changes in your circumstances as well.

As has turned out to be the case in other similar claims made on MSE in the past.

Towser

Does the HRMC automatically apply MAT to your tax allowances or do you have to apply for it?

p00hsticks

Towser wrote: »

Does the HRMC automatically apply MAT to your tax allowances or do you have to apply for it?

The spouse who wishes to transfer the MAT to their husband/wife/civil partner has to apply for it

davidbird

We have the Marriage Tax Allowance set up, my wife is self-employed, and I am an employed basic rate scottish tax payer, with a personal pension relief of £40.


Last year (2017-18) my wife earned slightly more than her reduced personal allowance, and paid tax on the amount.


This year (2018-19) the amount of tax allowance transferred has (on my tax code) been reduced from £1190 to £1134, giving me a personal allowance of 11850+40+1134=13024 rather than 11850+40+1190=13080.


HMRC say this is because she earned more than her allowance last year.


As she paid last year's tax in full, and assuming that this year she earns less than her reduced PA, does this mean we - as a couple - are paying tax twice on the £56 in the reduced allowance transfer?


Will it make a difference if this year she again earns more than her allowance?

Dazed_and_confused

HMRC say this is because she earned more than her allowance last year.

Utter garbage.

As she paid last year's tax in full, and assuming that this year she earns less than her reduced PA, does this mean we - as a couple - are paying tax twice on the £56 in the reduced allowance transfer?

No, you are getting confused (with help from HMRC from the sounds of it ). Each of you is taxed completely independently. What your wife owes will never affect your tax code.

Will it make a difference if this year she again earns more than her allowance?

Assuming she is only just over the reduced Personal Allowance then she will have some tax to pay but this won't impact you at all.

This year (2018-19) the amount of tax allowance transferred has (on my tax code) been reduced from £1190 to £1134, giving me a personal allowance of 11850+40+1134=13024 rather than 11850+40+1190=13080

This is because HMRC think you aren't a basic rate payer but are an INtermediate rate payer. Marriage Allowance entitled you, as the recipient, to a tax deduction of £238. It does not entitle you to a higher Personal Allowance. HMRC deal with this by giving you an extra "allowance" in your tax code. As a 21% payer allowing £1190 would save you £249.90 (1190 x 21%) when you are only entitled to £238 (in the current tax year).

£1134 extra allowance at 21% = £238.14

The main question here is are you an intermediate rate payer? If you aren't I'n not sure why you would have additional personal pension relief in your tax code either.

Dazed_and_confused

Will it make a difference if this year she again earns more than her allowance?

You could actually be in a situation where the increased number of Scottish tax rates benefits you as a couple.

Lets say your wife earns £11,850 and has applied for Marriage Allowance. Her tax bill will,

£11,850 - £10,660 (reduced Personal Allowance) = £1190 x 19% = £226.10 tax to pay

Your bill would be reduced by £238 so as a couple you will be £12 better off even though your wife has had to pay tax on an amount equal to the allowance she agreed to give up!

davidbird

"This year (2018-19) the amount of tax allowance transferred has (on my tax code) been reduced from £1190 to £1134, giving me a personal allowance of 11850+40+1134=13024 rather than 11850+40+1190=13080."

Apologies, what I should have said was in March I received a Tax Code Notification for what my Tax Code in 2018-19 was going to be. This was the 11850+40+1190=13080. In June I received a revised notification, this was for the 11850+40+1134=13024. It was this change that had me confused...


"This is because HMRC think you aren't a basic rate payer but are an INtermediate rate payer. Marriage Allowance entitled you, as the recipient, to a tax deduction of £238. It does not entitle you to a higher Personal Allowance. HMRC deal with this by giving you an extra "allowance" in your tax code. As a 21% payer allowing £1190 would save you £249.90 (1190 x 21%) when you are only entitled to £238 (in the current tax year).

£1134 extra allowance at 21% = £238.14

The main question here is are you an intermediate rate payer? If you aren't I'n not sure why you would have additional personal pension relief in your tax code either."

Thanks "Dazed&Confused", actually that does (almost) make sense - apart from as the £40 pension tax relief was in the initial notification, so why not the reduced allowance?


As I'm a Scottish tax payer, I am definitely into the 21% band. It seems like the nice lady at HMRC didn't really understand it either...


So, as my income varies month to month depending on actual hours worked, the amount of income I have in the 21% band changes as well. Would the amount of tax allowance transferred vary as well?