Personal Savings Allowance guide

polymaff

teddysmum wrote: »

But it's still not clear whether the full up to £5000 savings allowance applies, if your PA is increased by taking 10% from a spouse (ie £12100). The HMRC call centre person could not give me an answer and suggested I put the question in writing.

teddysmum wrote: »

You appear to be confused here:

There is no 'Married Allowance'. There is the Married Couple's Allowance, for older people, and the recent Marriage Allowance (not based on age) which let's the lower earner transfer 10% of their allowance, which certainly does increase the recipient's PA.

I don't think so. I'm using HMRC's own terminology for the latter, which may augment the P2 coding, but not the PA.

joe134

teddysmum wrote: »

This is confusing:


There is no 'Married Allowance'. There is the Married Couple's Allowance, for older people, and the recent Marriage Allowance (not based on age) which let's the lower earner transfer 10% of their allowance, which certainly does increase the recipient's PA.

I remember 50 years ago, transferring ALL OH's PA to me, as she wasn't working then., therefore, allowing my PA to rise, and Married( Mans)? Allowance, trying to beat the deadline to get it, and a nice rebate , for the bottom drawer:-)..
I think it was Mans, not PC now.:rotfl:
Grey stuff is getting thicker:-)

It's a minefield, and isn't getting any better, it's worse.
You need a degree to understand just the basics.
Now there's no R85's , it should be easier, NO NO;
We are , having to be on our guard we don't underpay HMRC, (always has been the case), BUT, even more so now.
More self Assessments just to be safe, the onus is now more on us than ever.

Consumerist

polymaff wrote: »

. . . Just on the issue of the PA, one misunderstanding which seems very widespread is that the Married Allowance Transfer increases the recipient's PA. It doesn't. One pound of taxable earnings over the basic PA and you are into tax, plus loss of SRA. . .

I don't quite see the purpose of MA if you still pay tax on all taxable income above the basic PA.

The loss of SRA might be another matter.

Help !

polymaff

Consumerist wrote: »

I don't quite see the purpose of MA if you still pay tax on all taxable income above the basic PA.

The loss of SRA might be another matter.

Help !

Oh, it can benefit the recipient of the MAT - but only in the SA302 calculation where, if the recipient is a basic rate taxpayer, he receives a rebate of up to the amount transferred times 20%. What it doesn't do is to extend the PA - and hence the PA+SRA+PSA etc. etc. - of the recipient.

Tax Simplification? YMBJ!

Consumerist

polymaff wrote: »

Oh, it can benefit the recipient of the MAT - but only in the SA302 calculation where, if the recipient is a basic rate taxpayer, he receives a rebate of up to the amount transferred times 20%. What it doesn't do is to extend the PA - and hence the PA+SRA+PSA etc. etc. - of the recipient. . .

Ok. Thanks for that.

By extension to that principle, does that also mean that the Marriage Allowance donor would still be able to earn the full £17k of taxable income without paying tax even though they had transferred £1.1k of their PA to their spouse?

polymaff

Consumerist wrote: »

Ok. Thanks for that.

By extension to that principle, does that also mean that the Marriage Allowance donor would still be able to earn the full £17k of taxable income without paying tax even though they had transferred £1.1k of their PA to their spouse?

As MAT only affects the calculation phase, I'd guess that the assessment phase would be done on the basis of £11k PA, £5k SRA and £1k SPA. Then if there was a non-zero liability it would be bumped up by 20% of the MAT. Hmm - but what about the zero-liability case?

Interesting question ... in this era of so-called Tax Simplification.

Eco_Miser

joe134 wrote: »

The PA to me is for earned income, pensions,etc, and interest is unearned income, ,as it was before they called it Savings allowance etc.
The two are separate, and one cannot be swapped for the other.

The PA is for all income, and if your pensions etc, don't use it all, the remainder can be used for savings income, and if there's still some left, for dividend income.

joe134

Eco_Miser wrote: »

The PA is for all income, and if your pensions etc, don't use it all, the remainder can be used for savings income, and if there's still some left, for dividend income.

Thanks Eco, that's why I put most of our savings in wifes name, as my pensions etc exceed my PA, and her doesn't.
At low rates today,even this year, she was border line , because several bonds paid out together, at term 4 years, when rates were higher, so it's easy to fall foul of the Hmrc, even when you plan ahead as I try to do.
That's why I always use up my Isa allowance, even though rates are rubbish, Optimist:rotfl:
I we hadn't then we would owe Hmrc every year now even at low rates.
With hmrc, one has to think ahead, not just what's good today.:beer:

teddysmum

I had to ring HMRC today and actually spoke to someone confident about the £5000 savings interest allowance, in the case where someone has taken on their spouse's 10% .


As hoped,she confirmed that(ignoring the new £1000 allowance) the £5000 savings interest allowance is on top of the £12100 and not the original £11000 ,so eg someone with £14100 earned income still has £3000 or savings interest allowance left.(The last person I spoke to didn't know).

Consumerist

teddysmum wrote: »

I had to ring HMRC today and actually spoke to someone confident about the £5000 savings interest allowance, in the case where someone has taken on their spouse's 10% .
As hoped,she confirmed that(ignoring the new £1000 allowance) the £5000 savings interest allowance is on top of the £12100 and not the original £11000 ,so eg someone with £14100 earned income still has £3000 or savings interest allowance left.(The last person I spoke to didn't know).

Many thanks for the clarification teddysmum.

It would follow from this that the MA donor's £5,000 zero-tax band (on savings interest) would start from taxable earnings of £9,900 (i.e. £11,000 - £1,100).

Frankly, this makes more sense to me.

Thanks again for the info.