Married persons tax allowance ~~~ NOT???

pumpman60

Work this out if you can. When does £1060 extra free tax free allowance per year equal £ 23 per month ? I thought it worked out as £88 per month. Not so according to HMRC. I have State Pension, Works pension and Services pension. I pay normal tax on works pension and basic tax on service one. I don't know how they're not all classed as one income but that's another issue, I now get the married persons allowance from my wife --£1060 pa -- I thought that's £88.33p extra per month, WRONG, its £23p.m. As explained by the HMRC, I can earn an extra £88p.m., but not get paid it direct by them. As I don't work ????? and I cannot transfer the unused allowance to my much smaller service pension on which I pay BR tax, although it is income. So beware all is not it seems with this allowance. If anyone has any idea how to maximise this allowance I would be grateful. It seems the pensioners are being conned again when it comes to tax.:(

Daniel54

pumpman60 wrote: »

Work this out if you can. When does £1060 extra free tax free allowance per year equal £ 23 per month ?

It actually works out at £212 per year

Calculated as 20% tax which is not paid on income of £1060

Pretty basic maths tbh

https://www.gov.uk/marriage-allowance-guide/how-it-works

jem16

pumpman60 wrote: »

I now get the married persons allowance from my wife --£1060 pa -- I thought that's £88.33p extra per month,

I'm afraid that's where you're going wrong. An extra £1060 allowance means that you won't pay tax on that £1060 whereas normally you would pay tax of 20% on it.

20% of £1060 is £212 so that is the yearly saving. Works out at £17.66.

WRONG, its £23p.m.

It's actually £17.66.

As explained by the HMRC, I can earn an extra £88p.m., but not get paid it direct by them. As I don't work ????? and I cannot transfer the unused allowance to my much smaller service pension on which I pay BR tax, although it is income.

The extra allowance will be attached to your main tax code and that is not the BR one.

So beware all is not it seems with this allowance.

All is at it seems. What is wrong is your understanding of it. You don't pay £1060 less tax. You get an allowance which gives you an extra £1060 tax-free as opposed to that £1060 being taxed at 20%.

If anyone has any idea how to maximise this allowance I would be grateful.

How much do you receive from the pension you have the main tax code attached to?

It seems the pensioners are being conned again when it comes to tax.:(

Nobody is being conned at all. Your understanding of tax is, however, wrong.

le_loup

pumpman60 wrote: »

It seems the pensioners are being conned again when it comes to tax.

Whoops!
Best to act the grumpy old man after you've put you brain into gear.

OldBeanz

le_loup wrote: »

Whoops!
Best to act the grumpy old man after you've put you brain into gear.

Why would we half the number of posts on here. Surely one of the advantages of being old is being grumpy and getting away with smells and noises :A which would be frowned on when emanating from someone younger.:j

Alter_ego

The extra tax allowance can be attached to any income or pension you pay BR tax on. Wife phoned and told them to transfer it to the income she wanted it on- no problem done next month.

molerat

pumpman60 wrote: »

...... I have State Pension, Works pension and Services pension. I pay normal tax on works pension and basic tax on service one. I don't know how they're not all classed as one income but that's another issue all income is taken into account assessing tax but as they come from different sources they cannot be "one income" ......... but not get paid it direct by them. HMRC do not generally pay people As I don't work ????? and I cannot transfer the unused allowance to my much smaller service pension on which I pay BR tax, yes you can, I do ............

You can have your allowances set against whichever (taxable) income you wish, it is your right. Mine is split between my 2 pensions, one larger than the other, to get the maximum advantage but if one of your pensions is higher than your (new) tax allowance there is no point. (well there is in that you will get an extra £1.80 p.a. net income due to the way that PAYE codes work)

jem16

Alter_ego wrote: »

The extra tax allowance can be attached to any income or pension you pay BR tax on. Wife phoned and told them to transfer it to the income she wanted it on- no problem done next month.

The tax code can certainly be split between 2 or more income streams which is presumably what has happened with your wife.

That's why I have asked the Op what the amount of his Works pension is as it might be sensible to do this.

Froglet

While this subject is being discussed, and to save starting another thread perhaps one of you knowledgeable people can help.


Next year hubby gets the state pension.He already gets 2 pensions,one fixed,one flexible.At present he pays no tax but I have worked out that he will be just over when he starts getting the state pension.We are probably going to defer it for as long as poss,depending on circumstances,but at least for 6 months.


So for 2016/2017 he will still pay no tax,I understand how the system works and can use it to our advantage until april 2017.


Then,once he gets the state pension as well,he will be over the tax limit and I intend transferring my allowance to him.I have a part time job which brings in about 5k.


Firstly,am I able to transfer the whole amount of the married allowance or will it be pro rata.And will I be able to transfer the allowance,BEFORE he starts the new tax year,when he is not paying tax or do we need to wait until it is proven he pays tax,before he is allowed to receive it,and either pay less or no tax?


Hope you can understand all that and that I have explained my situation properly.

molerat

You can transfer the allowance even though he does not currently pay tax. The .gov site is badly worded, "basic rate tax payer" means "not higher or additional rate tax payer".

atush

when next year? Before april 5th or after?

If before, deferring pays twice as much before that date (ie 10% instead of 5%)