Marriage Allowance

Jeremy535897

Those of us with longer memories remember the iniquity of a husband's and wife's wage being aggregated for income tax purposes, resulting in a serious demotivation for both spouses to work. The wife's earned income allowance was about as useful as the marriage allowance is today. What we really need is independent filing, but with an option to file jointly for married/civil partnership couples if it would be advantageous, or if they claimed benefits.

[Deleted User]

Jeremy535897 said:

Those of us with longer memories remember the iniquity of a husband's and wife's wage being aggregated for income tax purposes, resulting in a serious demotivation for both spouses to work. The wife's earned income allowance was about as useful as the marriage allowance is today. What we really need is independent filing, but with an option to file jointly for married/civil partnership couples if it would be advantageous, or if they claimed benefits.

Indeed. There was an option to elect for separate assessment but I have to say that my memory doesn’t stretch far enough to remember exactly how it worked. One for the relics.

sheramber

In 1971 an election for separate taxation of a wife's earnings was introduced. Couples could elect to have their earned income assessed separately for tax, and a wife's earned income was taxed as if she were a single person. This election had to be made jointly, and any unearned income enjoyed by a wife continued to be aggregated with her husband's when assessed for tax. Although the wife claimed her own single person's allowance, neither spouse could claim either of the married allowances. Electionhttps://researchbriefings.files.parliament.uk/documents/RP95-87/RP95-87.pdf for separate assessment was only attractive for couples with relatively high incomes, where the wife had significant earned income. Couples only benefited if the saving they made in higher rate tax, from the disaggregation of the wife's earned income, outweighed the loss of personal allowances (the gap between the single and married allowances). By 1989-90 spouses had to have a joint income of £30,511, of which the wife's earned income had to be at least £7,026, before the election would be beneficiaL

https://researchbriefings.files.parliament.uk/documents/RP95-87/RP95-87.pdf

[Deleted User]

sheramber said:

In 1971 an election for separate taxation of a wife's earnings was introduced. Couples could elect to have their earned income assessed separately for tax, and a wife's earned income was taxed as if she were a single person. This election had to be made jointly, and any unearned income enjoyed by a wife continued to be aggregated with her husband's when assessed for tax. Although the wife claimed her own single person's allowance, neither spouse could claim either of the married allowances. Electionhttps://researchbriefings.files.parliament.uk/documents/RP95-87/RP95-87.pdf for separate assessment was only attractive for couples with relatively high incomes, where the wife had significant earned income. Couples only benefited if the saving they made in higher rate tax, from the disaggregation of the wife's earned income, outweighed the loss of personal allowances (the gap between the single and married allowances). By 1989-90 spouses had to have a joint income of £30,511, of which the wife's earned income had to be at least £7,026, before the election would be beneficiaL

https://researchbriefings.files.parliament.uk/documents/RP95-87/RP95-87.pdf

Exactly. The alternative was a wife’s earnings election. All showing our age.

Jeremy535897

You have to be careful about distinguishing the election for separate taxation of wife's earnings under section 23 and schedule 4 FA 1971 and the section 38 ICTA 1970 separate assessment procedure. You could elect for either or both to apply. Separate taxation allowed a wife to pay a lower rate of tax on her earnings, at the expense of the married couple's allowance. Separate assessment merely allocated the tax due in total to each of the spouses, without altering the overall liability at all.

[Deleted User]

Jeremy535897 said:

You have to be careful about distinguishing the election for separate taxation of wife's earnings under section 23 and schedule 4 FA 1971 and the section 38 ICTA 1970 separate assessment procedure. You could elect for either or both to apply. Separate taxation allowed a wife to pay a lower rate of tax on her earnings, at the expense of the married couple's allowance. Separate assessment merely allocated the tax due in total to each of the spouses, without altering the overall liability at all.

Yes - all coming back to me. I was on the other side of the fence at the time.

stambridge

I was claiming marriage allowance as had low income but am now getting state pension from 29th March which puts my total income over the personal allowance.  I did not get first pension payment till 18th April so did not cancel my marriage allowance until today.  Issue now is tax office will not cancel the allowance until April next year so I will be paying approx £250 extra tax till next year. If I had cancelled this before 4th April presumably they would have cancelled the allowance straight away.  Of course my wife will benefit from the allowance for an extra year but I have the lower income.  Just a tip really that you should cancel the allowance before the end  of the tax year if you are no longer eligible.

StayinAlive

 I wonder if anyone can help with this. I have been enjoying the MA transfer from my wife for the last 6 years with no problem. She has remained a non-tax payer and I have remained a basic rate payer. So far so good. Now all of a sudden HMRC has estimated my income will put me into the higher tax bracket and cancelled next year's allowance. (This is despite the fact that I had updated my expected income for this year to below said bracket, via Gov Gateway, two months ago). I have re-amended my expected income to my previous figure and written to HMRC to advise and ask for the MA to be reinstated. No reply yet on that. Today I receive two tax calculations from previous years 20/21 and 21/22 which have effectively cancelled the MA for those years as well and showing me as owing the MA amount for those years.

Whether or not we ever get this years MA sorted is one thing but I can't see how that would affect previous years as they clearly accept my income figures in the calculations and I remained in the basic bracket. Has anyone come across this before? Is it just likely to be a computer error?

Other than writing another letter, is there anything else I can do? (Phoning is a real issue at the moment).

r6mile

My wife submitted her tax return today and applied to transfer marriage allowance to me. I then submitted my own tax return - but my calculation (understandably) did not include the marriage allowance yet. How long should I expect it to take for it to show up on my tax account? Or does it get paid separately from any other tax refunds?

Dazed_and_C0nfused

StayinAlive said:

 I wonder if anyone can help with this. I have been enjoying the MA transfer from my wife for the last 6 years with no problem. She has remained a non-tax payer and I have remained a basic rate payer. So far so good. Now all of a sudden HMRC has estimated my income will put me into the higher tax bracket and cancelled next year's allowance. (This is despite the fact that I had updated my expected income for this year to below said bracket, via Gov Gateway, two months ago). I have re-amended my expected income to my previous figure and written to HMRC to advise and ask for the MA to be reinstated. No reply yet on that. Today I receive two tax calculations from previous years 20/21 and 21/22 which have effectively cancelled the MA for those years as well and showing me as owing the MA amount for those years.

Whether or not we ever get this years MA sorted is one thing but I can't see how that would affect previous years as they clearly accept my income figures in the calculations and I remained in the basic bracket. Has anyone come across this before? Is it just likely to be a computer error?

Other than writing another letter, is there anything else I can do? (Phoning is a real issue at the moment).

HMRC don't normally cancel Marriage Allowance because of estimates, certainly not for the current tax year.

It's once they review things after the tax year ends that it would be cancelled.

For example if they determined you were a higher rate payer for 2021-22 they would cancel it for that year and any later ones.

What (exactly) do the calculations you've received show?