A simple, visual model of 2016/17

polymaff

EnglishMohican wrote: »

OK, I will be the idiot who does not think this is right/complete.

It cannot be right to just ignore the MAT if you receive it. For earned income, the 11000 must become 12100 (or some such). It would be logical if the 16000 became 17100 but government and logic may not compute.

This also seems to ignore the £1000 savings allowance (wrong words?) unless you wish to claim that interest below £1000 is not taxable and therefore covered by the "taxable interest" line. Nicer to be clear about this if so. I took it that "taxable" meant non-ISA for instance.

Sorry if I have it all wrong or have missed the point but it seems worth trying to get it clear.

No. This model addresses how your assessment for that year will work out. Being the recepient of MAT has no effect on that assessment. How much you then owe HMRC involves many factors, tax owing from previous, tax overpaid, being a recipient of an MAT etc. - which, in turn, may affect your PAYE coding.

No. The PSA is fully implemented in this model

EnglishMohican

Please try that answer again in simpler words.

You say that this models how ones assessment works out. You seem to imply that that is different to "how much one owes HMRC"

Yes, I can accept that this is a simple model that cannot address every nook of taxation space but if MAT is important enough to the model to reduce the 11000 if you give MAT, then it should be important enough to increase the 11000 if you receive it. Or does MAT only apply to earned income and not actually be an increase in Personal Allowance?

Ultimately, if I have £11500 of earned income, receive MAT (so my Personal Allowance is £12100?), my earned income is tax free. Can I then claim £5000 of savings interest to be taxed at 0% or only £4500 (plus another £1000 as tax free which the model still does not seem to mention as far as I can see)

polymaff

EnglishMohican wrote: »

You say that this models how ones assessment works out. You seem to imply that that is different to "how much one owes HMRC"

And so it is.Your assessment is just one factor in defining how much you owe HMRC. You have a running account with HMRC. You receive statements of that account. Credits to that account are payments you make, interest paid to you by HMRC and Receipt-of-MAT payments. Debits to that account are your assessments, interest you owe HMRC etc. etc.

EnglishMohican wrote: »

Yes, I can accept that this is a simple model that cannot address every nook of taxation space but if MAT is important enough to the model to reduce the 11000 if you give MAT, then it should be important enough to increase the 11000 if you receive it. Or does MAT only apply to earned income and not actually be an increase in Personal Allowance?

Simple to understand - but totally rigorous and correct, I believe. You are completely wrong about being an MAT recipient.

EnglishMohican wrote: »

Ultimately, if I have £11500 of earned income, receive MAT (so my Personal Allowance is £12100?), my earned income is tax free. Can I then claim £5000 of savings interest to be taxed at 0% or only £4500 (plus another £1000 as tax free which the model still does not seem to mention as far as I can see)

You're first sentence is totally wrong - for reasons given in the original model, and elaborated in both this and my recent posting to you. Repeat it a thousand times and it will still be wrong.

I believe that the model deals correctly with all combinations of Personal Allowance, Starting Rate Allowance, Personal Savings Allowance and Dividend allowance for total taxable incomes up to £150k. Not something HMRC can - at least as of 17th March 2017 - claim.

EnglishMohican

Repeating time and time again that you are right and I am wrong may be true but is not helpful.

I see no explanation in the original model or in either of your recent replies to me that explains why MAT should not be added to my Personal Allowance and thereby increase the amount of earned income that I can receive without paying tax on it.

So I will try again. Is the £1100 of personal allowance that is transferred zero rated or tax free when it arrives with me? Do the government pull a fast one and reduce my other half's tax free personal allowance but only give me the same numerical amount of zero rated allowance? That is the only reason I can think of for your insistence on not including it in your model.

dales1

Here's what the main MSE site says.

"In most cases, the allowance will be given by adjusting the recipient partner's personal tax code. The partner who transferred their personal allowance will also receive a new tax code, if employed. If the recipient partner is in self-assessment, it will reduce their self-assessment bill".

polymaff

EnglishMohican wrote: »

Repeating time and time again that you are right and I am wrong may be true but is not helpful.

I see no explanation in the original model or in either of your recent replies to me that explains why MAT should not be added to my Personal Allowance and thereby increase the amount of earned income that I can receive without paying tax on it.

So I will try again. Is the £1100 of personal allowance that is transferred zero rated or tax free when it arrives with me? Do the government pull a fast one and reduce my other half's tax free personal allowance but only give me the same numerical amount of zero rated allowance? That is the only reason I can think of for your insistence on not including it in your model.

HMRC just give the qualifying recipient of the MAT a credit of £1,100. It has been known to be paid as a cheque (when claimed late), as a credit to your tax account or as an adjustment to one's PAYE code. In itself, it is not subject to Income Tax and therefore is not part of your assesssment to Income Tax.

By the way, this model is a tool, not a tutorial - although many have commented that the model has helped them to better understand the assessment process.

polymaff

dales1 wrote: »

Here's what the main MSE site says.

"In most cases, the allowance will be given by adjusting the recipient partner's personal tax code. The partner who transferred their personal allowance will also receive a new tax code, if employed. If the recipient partner is in self-assessment, it will reduce their self-assessment bill".

The art of writing concisely and precisely is rarely encountered - as the above demonstrates. The first sentence is made useless by the admission that what it says might or might not apply to you - but then not setting out how you could judge that issue. The final sentence is rendered meaningless by its use of the careless term "self-assessment bill".

If you can detect such sense-destroying ambiguities in my model, please comment.

polymaff

EnglishMohican wrote: »

...I see no explanation in the original model or in either of your recent replies to me that explains why MAT should not be added to my Personal Allowance....

Just a thought. You are not getting Personal Allowance and PAYE Code mixed up, are you?

Dazed_and_confused

EnglishMohican

Where you are getting confused and what polymaff is getting at is that if you are the receiver of the Marriage Allowance your Personal Allowance is not increased by the MAT amount when the HMRC do your year end calculation (either under PAYE or if you self assessment).

Being the recipient of MAT entitles you to a tax credit/deduction from your tax liability of the MAT amount x 20% (£1060 x 20% = £212 in 2015:16).

Eco_Miser

EnglishMohican wrote: »

This also seems to ignore the £1000 savings allowance

It sneaks in here:

polymaff wrote: »

If the column doesn't exceed the £43,000 line then make that £500 of taxable savings income £1,000.