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Marriage Allowance
Comments
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That's why Stardust16(post 537) is confused.
It appears that HMRC consider that as her savings interest takes her over the PA , she has to pay back the £212 saved by her husband taking her 10% allowance, but the article does not imply this in its example situation.
Indeed,as has been suggested , if this year she does not transfer the allowance to her husband , she will not pay any tax (she hasn't actually, anyway; just paid back what her husband saved), but they will still lose the benefit of the money saved on her husband's tax, so as a couple will be no better off.0 -
That article seems to makes exactly the same mistake as did Teddysmum - i.e. ignoring the effect of the SRA. It also plumps for the wrong one of the two conflicting GOV.UK notes. It also uses made-up terminology such as in "the tax reducer" without definition or other rationale. In summary, it only adds to the confusion in tax-payers' minds.
And this is supposed to be the Era of Tax Simplification.
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...so as a couple will be no better off.
This will be the fate of many who qualify for the MAT. Unless the donor has Personal Allowance (before and, maybe, after the PA is reduced - see my previous) to spare, they'll gain nothing.
MAT is quite a progressive concept - shame about the documentation
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I have a maths degree and thoroughly understood the tax position...until now.:)0
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That article seems to makes exactly the same mistake as did Teddysmum - i.e. ignoring the effect of the SRA.
Eureka!
Is this what I missed (the part in red taken in a quote from an MSE article) ?
I had assumed this before, but the fact that Stardust16's interest is over £5000 is the crucial factor in her case ? I can't find any explanation of the fact that savings interest up to £5000 doesn't count (other than the MSE article), but didn't apply on line, so won't have seen the actual form.
Q. I’ve seen on the government website it says you can't get the marriage tax allowance if you have over £5,000 of savings interest? That's not true. We've had a few people ask us this question – if this is you, you're probably misreading the situation.
It comes from this question on the apply section of the HMRC website:
"Is your annual income £11,000 or less? (don't include savings interest under £5,000)."
It's all about what counts as a non-taxpayer, and it does get a little complicated as it's all due to something called the tax-free savings allowance for lower incomes. That means you can earn £11,000 under your personal allowance and then have £5,000 of savings interest tax-free and still not pay tax on it.
So in that circumstance you could actually earn more than £11,000 in total income and interest, and still count as a non-taxpayer. This question is just a slightly cumbersome way of saying that.0 -
Consider someone with an occupational pension of £11k and some savings income starting to receive a state pension of £6k. Before the state pension starts, up to £5k of savings income is taxed at 0% due to the Starting Rate Allowance. After the state pension starts the SRA vanishes and so the pensioner pays the expected 20% on the state pension PLUS 20% on the up to £5k of savings income - a marginal tax rate of up to 40% on a significant fraction of only £22k of income. This penalty on a low-income tax-payer of up to £1,000 puts the relatively low losses due to anomalies involving MAT and the PSA into perspective.
£17,000 gross ( £15,800 net) per annum is not a particularly low retirement income? The pensioner would also be entitled to a winter fuel allowance and free bus travel - he would also be entitled to up to £1000 of savings interest tax free.
A pensioner on GPC would be on not much more than £8000 per annum. Admittedly he'd probably have some CT relief - but that is a really low retirement income.
A single adult on a 40 hour minimum wage job would be on under £15,000 gross a year and would be paying tax and NI on top.0 -
£17,000 gross ( £15,800 net) per annum is not a particularly low retirement income?
I sense a hobby-horse!
Its debatable - but I stand by my words. The Chancellor would agree with me, it appears, as he reckons that you shouldn't hit 40% until your taxable income is £43,000The pensioner would also be entitled to a winter fuel allowance and free bus travel - he would also be entitled to up to £1000 of savings interest tax free.
Yielding nothing, not true and so what, respectively in this, actual, case, Xylophone.
I'm making a point about how tax measures produce anomalies - and this is an example of an anomaly far more sizeable than that for MAT - alothough not as socking as the 50,000% marginal rate introduced by the PSA!
I repeat: Badly thought out tax policy produces unfair outcomes.0 -
Eureka!
Is this what I missed (the part in red taken in a quote from an MSE article) ?
I had assumed this before, but the fact that Stardust16's interest is over £5000 is the crucial factor in her case ? I can't find any explanation of the fact that savings interest up to £5000 doesn't count (other than the MSE article), but didn't apply on line, so won't have seen the actual form.
Q. I’ve seen on the government website it says you can't get the marriage tax allowance if you have over £5,000 of savings interest? That's not true. We've had a few people ask us this question – if this is you, you're probably misreading the situation.
It comes from this question on the apply section of the HMRC website:
"Is your annual income £11,000 or less? (don't include savings interest under £5,000)."
It's all about what counts as a non-taxpayer, and it does get a little complicated as it's all due to something called the tax-free savings allowance for lower incomes. That means you can earn £11,000 under your personal allowance and then have £5,000 of savings interest tax-free and still not pay tax on it.
So in that circumstance you could actually earn more than £11,000 in total income and interest, and still count as a non-taxpayer. This question is just a slightly cumbersome way of saying that.
My comments on your, and the web-site's, computations wre based upon not taking into account a particular allowance that would alter the computations. The 2015/16 income tax system is the most complex one for a while. To navigate it you need to understand fully the relationship between various incomes and allowances. I wrote an article to help those trying to achieve this which has been well received. You might like to look at it:
http://forums.moneysavingexpert.com/showpost.php?p=70422918&postcount=9
The next hurdle is to weed out the good from the bad advice. I think that it has been amply shown by recent posts to this thread that the data from GOV.UK which earlier posters - and that web-site article - were relying on is quite simply wrong. GOV.UK is notorious for this - and the subject of how much you can earn without paying tax is ultra-notorious. At first it was a blanket statement stating that in 2016/17 you wouldn't pay tax on the first £17,000. Wrong. Then they said that if your income did not exceed £17,000 you wouldn't pay any tax. Wrong. Then they said that your income could be up to £17,000 without you having to pay tax. True, but, like the ISP claims of "up to x Meg broadband speed" there are cases - a lot of cases - where this will never be achievable. So true, but very, very misleading.
None of the above refers to MAT issues - but one needs to understand the tax system before one can understand the bodges and tweaks involved in some - maybe all - of the recent additions to UK's income tax system.
Your red-highlighted statement needs to be looked into. It implies that the SRA can offset the threshold used in the MAT validation process - which doesn't seem to accord with the legislation or with HMRC's in-house documentation - so be wary.
To me, the simplest test that should be applied when considering whether to apply for MAT is this. Will the donor's personal allowance be fully used up in the relevant tax year? If so, forget MAT.0 -
My comments on your, and the web-site's, computations wre based upon not taking into account a particular allowance that would alter the computations. The 2015/16 income tax system is the most complex one for a while. To navigate it you need to understand fully the relationship between various incomes and allowances. I wrote an article to help those trying to achieve this which has been well received. You might like to look at it:
http://forums.moneysavingexpert.com/showpost.php?p=70422918&postcount=9
The next hurdle is to weed out the good from the bad advice. I think that it has been amply shown by recent posts to this thread that the data from GOV.UK which earlier posters - and that web-site article - were relying on is quite simply wrong. GOV.UK is notorious for this - and the subject of how much you can earn without paying tax is ultra-notorious. At first it was a blanket statement stating that in 2016/17 you wouldn't pay tax on the first £17,000. Wrong. Then they said that if your income did not exceed £17,000 you wouldn't pay any tax. Wrong. Then they said that your income could be up to £17,000 without you having to pay tax. True, but, like the ISP claims of "up to x Meg broadband speed" there are cases - a lot of cases - where this will never be achievable. So true, but very, very misleading.
None of the above refers to MAT issues - but one needs to understand the tax system before one can understand the bodges and tweaks involved in some - maybe all - of the recent additions to UK's income tax system.
Your red-highlighted statement needs to be looked into. It implies that the SRA can offset the threshold used in the MAT validation process - which doesn't seem to accord with the legislation or with HMRC's in-house documentation - so be wary.
To me, the simplest test that should be applied when considering whether to apply for MAT is this. Will the donor's personal allowance be fully used up in the relevant tax year? If so, forget MAT.The HMRC website states just 'income' and I can only find reference to the £5000 on the MSE link. there is very little information on the net.
Well, I've led you to the water, T. Now it's up to you.0
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