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HMRC incorrect calculation
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cjc1951
Posts: 3 Newbie
in Cutting tax
You know the rule whereby the first £5000 of investment income is taxed at 0% for 2015/16?
Well this works fine with HMRC generally, but they have a software problem for any of us who have transferred out our marriage allowance to our partner.
They confess to having a "system problem" that fails to take this 0% rate into account in this circumstance, meaning that any tax calculations that have already been sent out are likely to be wrong. In my case they sent me a bill for £150, instead of a refund of £50.
It may be worth checking any calculations you've been sent!
Well this works fine with HMRC generally, but they have a software problem for any of us who have transferred out our marriage allowance to our partner.
They confess to having a "system problem" that fails to take this 0% rate into account in this circumstance, meaning that any tax calculations that have already been sent out are likely to be wrong. In my case they sent me a bill for £150, instead of a refund of £50.
It may be worth checking any calculations you've been sent!
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Comments
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Surely the new Dividend Allowance of £5000 is for 2016/17 though?butterfly )i(0
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Re 0% band on £5000 savings interest.
http://www.taxvol.org.uk/about-tax/entitled-10-band-savings-interest/
(from 6/4/2015).
Re dividend allowance (from 6/4/2016)
https://www.gov.uk/government/publications/dividend-allowance-factsheet/dividend-allowance-factsheet0 -
cjc1951 has brought this topic up before - but when asked to supply data to justify his conclusions - nothing happens.0
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cjc1951 is correct that there is a problem with the tax calculation for a small group of people. I know as I have the same issue.
I have been told that the software will be updated next week.
The people that have the problem are low earners, with interest of over £5000 who have given 10% of their allowances to their spouse.
An amount appears on the tax calculation (of the donor) which collects back the tax benefit which has been given to the spouse.
No explanation of where the tax due comes from either!0 -
Careful_ly wrote: »cjc1951 is correct that there is a problem with the tax calculation for a small group of people. I know as I have the same issue.
Then can YOU post figures from a real case demonstrating this issue?0 -
My total income is £13,000 of which more than £5000 comes from interest. Therefore I am a non tax payer.
My P800 shows the amount of tax due as £212 - £37.50 refund for accounts which I could not complete an R85 for.
The £212 is 20% tax payable on the Marriage Allowance Transfer.
My OH is a basic rate tax payer.
There is someone else I have seen posting on here that has the same issue Stardust16
HMRC have told me they have an issue with the calculation, which should be corrected with a software update next week.
But I am quite sure that others will be paying HMRC when this is an error.
When I first queried this they wrote to say it was correct!0 -
There is someone else I have seen posting on here that has the same issue Stardust16
Post 618
https://forums.moneysavingexpert.com/discussion/comment/71035989#Comment_71035989However, they admit that they are now aware that 'part of the script that does the calculation for savings interest in excess of £5000 is missing. It should have been there. The computer system will be amended but no time scale can be given.'0 -
Careful_ly wrote: »My total income is £13,000 of which more than £5000 comes from interest. Therefore I am a non tax payer.
My P800 shows the amount of tax due as £212 - £37.50 refund for accounts which I could not complete an R85 for.
The £212 is 20% tax payable on the Marriage Allowance Transfer.
My OH is a basic rate tax payer.
There is someone else I have seen posting on here that has the same issue Stardust16
HMRC have told me they have an issue with the calculation, which should be corrected with a software update next week.
But I am quite sure that others will be paying HMRC when this is an error.
When I first queried this they wrote to say it was correct!
Thank you. That certainly is an error, and maybe part of a bigger mistake HMRC have made. HMRC still appear to insist that the MAT donor must have a taxable income of no more than their personal allowance. This is just not supported by the legislation. HMRC have said that they will allow the donation - but cancel it out by doing what they have done to you. No, HMRC, you are wrong! HMRC have also stated that if your taxable income is above the personal allowance their is no point donating MAT. Well, by their understanding - and how they've treated you - that is true; but one can imagine circumstances where the donor had £20k of taxable income - and it still would benefit them to be a MAT donor.
One can - HMRC can't, it appears0
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