Marriage allowance - how would this work?

okydoky

Thought this was for me but not so sure now, anyone help?

I currently drawdown £9250 from my pension, I have about £2500 in bank interest which I now get gross interest on, and my only other income is about £1200 from share dividends, which are of course taxed at source.

So I was about to transfer part of my allowance to my wife, thereby reducing my PA to £9540 - BUT, how does this work when the share dividends are technically income.

Anybody help me, can I apply or not?

zygurat789

okydoky wrote: »

Thought this was for me but not so sure now, anyone help?

I currently drawdown £9250 from my pension, I have about £2500 in bank interest which I now get gross interest on, and my only other income is about £1200 from share dividends, which are of course taxed at source.

So I was about to transfer part of my allowance to my wife, thereby reducing my PA to £9540 - BUT, how does this work when the share dividends are technically income.

Anybody help me, can I apply or not?

Share dividends are not technically income, they are income and they are not taxed at source, if they were you would be able to reclaim the tax which you can't because it is a tax credit, only offsetable against any tax you are due to pay.
On your income you are losing this tax credit because you have no tax to pay. If you were to transfer £1060 of your PA to your wife she will pay tax on £1060 less, saving up to £212. You will have a liability to tax of c£198 from which you can deduct your tax credit of c£133 leaving youb to pay c£65.

purdyoaten

zygurat789 wrote: »

Share dividends are not technically income, they are income and they are not taxed at source, if they were you would be able to reclaim the tax which you can't because it is a tax credit, only offsetable against any tax you are due to pay.
On your income you are losing this tax credit because you have no tax to pay. If you were to transfer £1060 of your PA to your wife she will pay tax on £1060 less, saving up to £212. You will have a liability to tax of c£198 from which you can deduct your tax credit of c£133 leaving youb to pay c£65.

So much for simplifying the tax system.

Can you clarify why there is a tax liability at all (other than on the dividends)? (I think that I may be 'losing it'.)

I think that the op should claim as suggested.

bubbles0169

got my link to sign up, cant enter my total income for the year (bangs head on wall)
it says it doesn't match their records, ive tried omitting the pence, still wont accept the correct amount!!

zygurat789

purdyoaten wrote: »

So much for simplifying the tax system.

Can you clarify why there is a tax liability at all (other than on the dividends)? (I think that I may be 'losing it'.)

I think that the op should claim as suggested.

Income greater than allowances but since the tax rate is only 10% it should have read £99 and a tax credit of £133 so still wasting some credit.
That's the difference two hours makes

okydoky

zygurat789 wrote: »

Income greater than allowances but since the tax rate is only 10% it should have read £99 and a tax credit of £133 so still wasting some credit.
That's the difference two hours makes

So.........

Are you saying my wife would pay less tax, and I would pay no extra tax?

Thanks

purdyoaten

okydoky wrote: »

So.........

Are you saying my wife would pay less tax, and I would pay no extra tax?

Thanks

That would be the position. There is no reason why you should not make the claim.

zygurat789

purdyoaten wrote: »

That would be the position. There is no reason why you should not make the claim.

And every reason why you should.