Marriage Allowance

Dazed_and_confused

Can anyone explain this - not sure if it's anything to do with MAT.

Nothing to do with MAT, just standard for the situation you outline.

There are unused allowances so these are used by the interest.

Her interest isn't due to be taxed at either of the 0% rates.

If her wages/pension income were to increase and there were no spare allowances then the deduction wouldn't be included in the code (assuming it would be liable at one of the 0% rates).

Based on your post the change is having no material impact. And the new code is correct.

zagfles

Dazed_and_confused wrote: »

Are you sure? As I understood it if you were liable at higher rates or, if it weren't for the dividend (allowance) nil rate, would be liable at higher rate then you are ineligible.

But the same rule doesn't apply to the savings (allowance) nil rate.

Post #1242 onwards

zagfles

Dazed_and_confused wrote: »

Nothing to do with MAT, just standard for the situation you outline.

There are unused allowances so these are used by the interest.

Her interest isn't due to be taxed at either of the 0% rates.

If her wages/pension income were to increase and there were no spare allowances then the deduction wouldn't be included in the code (assuming it would be liable at one of the 0% rates).

Based on your post the change is having no material impact. And the new code is correct.

Why? Is this just sloppy programming of the PAYE system? A code of 1066N would result in the correct amount of tax being paid regardless of income increases (unless massive) and regardless of interest received (unless over £5000).

Whereas a code of 1036N would mean if she did a bit of overtime in the next 2 months she might end up paying tax where none is due, and before the tax code gets corrected.

polymaff

Dazed_and_confused wrote: »

Are you sure?

It is whether you are classified as a higher rate taxpayer - period.

There's an unjustified concentration on dividend income because the phenomenum that makes being a higher rate taxpayer complicated is far more likely - due to the order of taxation - to occur when dividend income bleeds over the Basic Rate Band upper border.

Loads of non-Savings Taxable Income could mean that it is PSA-covered Savings Taxable Income that could be the "bleed-over".

Dazed_and_confused

I cannot see anything that suggests being liable at 0%, albeit within the higher rate band, would mean you weren't eligible for Marriage Allowance.

It is clear (well clear for legislation!) that dividends taxed at 0% can cause this issue but i cannot see anything like that for savings income.

polymaff

"(2)Income tax is charged at the savings higher rate on an individual's income which—

(a)is savings income, and

(b)would otherwise be charged at the higher rate or the default higher rate."

Indicating that income is still regarded as higher rate even if relieved by the PSA.



"(16)In section 55C(1)(c) (election to reduce personal allowance conditional on not becoming subject to higher rates) as amended by section 5 of this Act, after “other than the basic rate,” insert “ the default basic rate, the savings basic rate, ”.

An amendment make it explicit that the criterion "not becoming subject to higher rates" is the crux (and that savings rates are part of that construction)


Both from FA2016, as amended.

Pixie2019

Thanks for your replies everyone. I should've been clearer. After my redundancy in Nov 2016 i got a tax rebate of some £700-odd in April 2017. So i guess i start fresh from then and could claim for 2017-2018 (i earned £0 between Nov 2016 and last week myself) and, as you say, if i waited until April this year also try for 2018-2019. It may be that we're not eligible as my husband might have gone over the higher rate tax payer band in those years with overtime, so i need to get his paperwork.

And the reason that we don't want to mess with tax codes is just that my husband doesn't want any complications with his PAYE at work. Maybe I'll talk him around on that.

Is there a trustworthy online calculator where i could see how much we *could* be due before applying? If it's just £100 or so I might just leave it.

TIA

Dazed_and_confused

Your hubby sounds like he's paying plenty of tax so it would benefit him by £220 in 2016:17, £230 in 2017:18 and £238 in 2018:19.
This is on the assumption he wasn't liable to higher rate tax in these years.

What you need to know is your total taxable income in each year. From what you say 2017:18 seems straightforward and won't affect his tax code. But you should check the paperwork you for with your refund for 2016:17 to see it will be beneficial for you to apply. 2018:19 will really depend on your earnings between now and 5 April.

I would suggest you be sure of your facts before applying. All HMRC will do is check eligibility, not whether you can benefit (as a couple). So without checking you could well be eligible but you then end up with a bill whilst hubby gets a refund. Best to check if you benefit as a couple yourself first.

MalPage44

Hi all,

I'm just looking for some generic advice, as I am a bit confused about this.

I applied for Marriage tax allowance a while ago but I made a mistake when completing the form. As a result I ended up owing the HMRC money and they have been deducting money from my pay.

I called last week to query this and they resolved the issue for me, advised that I would get that overpayment refunded as well as the backdated payment.

I had my pension protection payment on friday and there was an additional £261.00 on it, and Im wondering if that's the extent of my refund? I assumed that I would have had a cheque and I've had no paperwork to explain it.

I'm wondering if someone can give me some mroe information.

Dazed_and_confused

I applied for Marriage tax allowance a while ago but I made a mistake when completing the form. As a result I ended up owing the HMRC money and they have been deducting money from my pay.

By applying for Marriage Allowance you can only ever pay the same or more tax. Never less.

A new tax code may well have resulted in the £261 adjustment. But you should also notice a reduction in the amount of tax paid from now to the end of the tax year (unless you are now a non taxpayer and the £261 was all the tax you paid in this tax year).

But you haven't really given us much to go on. Which tax years did you owe tax for?
Which tax years was this being collected in?
If some was due to be collected in 2019:20 it might be that that won't happen now.

But without some more actual facts it's all guesswork.

If you have somehow managed to cancel your claim (as the applicant I didn't think you could usually do this retrospectively) will this now mean that your spouse will get a tax bill because they are no longer entitled to the Marriage Allowance tax credit they presumably received when you originally applied.

I'm not totally convinced you haven't actually made things worse but without the detail it's impossible to know.