Marriage Allowance

Dazed_and_C0nfused

Nothing to do with DWP.  You do need to look at each tax year separately, if you get it wrong you could end up with a tax bill.

polymaff

DWP won't help you with tax - that's between you and HMRC.

As for any previous years, if you'd both qualify for MAT, work out how much extra tax you would have paid if you had elected for MAT that year.  If your spouse actually paid more than that amount in tax that year, go for it.

PS You are right to be cautious. Too many Lewises have been far too gung-ho about MAT..

veryintrigued

polymaff said:

veryintrigued said:

Any news on the 20/21 levels now the budget is out?

If you mean PA, same as 19/20, £12,500 - then increasing by CPI.

No marriage tax allowance for the tax year 2020/21.  I thought that's what this thread was about.

I.e. 19/20 is £250

Dazed_and_C0nfused

It is based on the amount of the Personal Allowance so as that hasn't changed the MA amount hasn't changed.

polymaff

veryintrigued said:

polymaff said:

veryintrigued said:

Any news on the 20/21 levels now the budget is out?

If you mean PA, same as 19/20, £12,500 - then increasing by CPI.

No marriage tax allowance for the tax year 2020/21.  I thought that's what this thread was about.

I.e. 19/20 is £250

Oh dear, sorry for confusing you.

Mr87

Hi all - quick qn - I just received a pay rise which was backdated in my last pay check of the year. Coupled with bank interest (a few pounds) and dividends this takes my total taxable earnings to £50,269.26.

I do however some charitable giving with Gift Aid @ £10 a month n.b. from my own bank account. So £120 p.a. If I lump sum another £96 (I'll round up to £100) before the end of the tax year, do I escape the cliff edge of £50k?

Dazed_and_C0nfused

The dividends complicate this somewhat.

Providing you aren't liable to tax at 40% (earnings or interest in your case) and wouldn't be liable at 32.5% on your dividends if the dividend nil rate band didn't exist (£2,000 taxed at 0%) then you should be ok.

Providing you notify HMRC of your GIft Aid payments.  Making it crystal clear what the net and gross values are.

Remember Gift Aid doesn't reduce your taxable income it simply increase the amount of your basic rate tax band.  Which is important for Marriage Allowance as entitlement isn't based on income it is what tax rates you are liable on (or in the case of dividends would be liable on if the dividend nil rate band didn't exist).

Mr87

So just to make sure I understand this right...
Taxable earnings through gainful employment = £49,416.76
Bank interest = £2.50 (gross)
Dividends = £850

My earnings and interest are below £50k so I wouldn't be liable for 32.5% on the dividends in a world where the nil rate didn't exist. Therefore I can add earnings, interest, and dividends together to determine total taxable income i.e. £50,269.26. I am £269.26 over the 40% threshold. If I pay £215.41 in Gift Aid contributions (net) it increases my basic rate tax band by £269.26 (gross) which preserves my marriage allowance.

Interesting it is done on the basis of what tax rate you pay - I guess this makes sense because otherwise how could charities possibly know the tax you pay at source. I've been thinking about the High Income Child Benefit Charge which is based on how much you earn above £50k, so will need to pay that.

Dazed_and_C0nfused

HICBC isn't based on your earnings, it is based on adjusted net income.

So in your scenario you could have taxable income of £50.2k but if you make sufficient GIft Aid donations you can bring your adjusted net income down to less than £50k.

You would be liable to 32.5% on some of your dividend income.  Your earnings and interest takes you to £49,419 so £850 of dividends would be taxed £581 x 7.5% and £269 x 32.5% if the dividend nil rate band didn't exist.

But if you make a (net) Gift Aid contribution of £216 your basic rate band would be extended by £270 meaning none of the dividends would be taxed at higher rate if the dividend nil rate band didn't exist.

Mr87

Fab, thanks so much for your assistance. It was completely fortuitous I realised about MA a few days ago so I'm glad I spotted it in time...