Marriage tax allowance

Legacy_user

Hi,

I have just finished my self employed tax return for last tax year (up to April 17) and did not need to pay tax as was working part time. My partner earns more than me so I think I can give her some of my tax free allowance....all good - which I guess would come off her tax due this year.

However from start of April I started full time employment and therefore already know we won't qualify for it for this tax year. So can we still go ahead and set it up for this year, and then cancel it at the end of this tax year. Will they know (magically somehow) that the rebate is for last year, even though this year I am now on PAYE?

Thanks Ramble

Dazed_and_confused

If you apply in your tax return I believe it only applies for that year.

Have you checked how much tax, if any, you will owe when you calculate your tax with the reduced personal allowance?

sheramber

You mention partner. Are you aware you can only transfer the extra allowance if you are married or in a civil partnership?

nicebutdense

Marriage Tax Allowance coupled with Personal Savings allowance
Query on entitlement
I have for 2016/17 earned income of £9257 and gross (and net) interest of £1159. The interest is not taxable under the personal savings allowance. The total income including interest is £10416 which is £586 less than the personal allowance of £11000. The fixed amount of marriage allowance transfer is £1100.
The complication is how to calculate the unused personal allowance; is it £586, meaning that no marriage allowance transfer is available or is it £1743 (11000 - 9257), ignoring interest, which means I can use the marriage allowance transfer as the £1100 transfer is less than the £1743 personal allowance left over.
All other requirements under Marriage Allowance Transfer are met.
Bit of a head scratcher this!
Any help would be welcome- Thanks

polymaff

ramblehan wrote: »

Hi,

I have just finished my self employed tax return for last tax year (up to April 17) and did not need to pay tax as was working part time. My partner earns more than me so I think I can give her some of my tax free allowance....all good - which I guess would come off her tax due this year.

However from start of April I started full time employment and therefore already know we won't qualify for it for this tax year. So can we still go ahead and set it up for this year, and then cancel it at the end of this tax year. Will they know (magically somehow) that the rebate is for last year, even though this year I am now on PAYE?

There's no need for you to cancel it. There's no "magic" - MAT is applied retrospectively. If you've applied but you don't turn out to qualify for the year in question, then you don't get MAT for that year. If you do qualify then you - plural - will benefit by between £0 and £220 (for 2016/17)

polymaff

nicebutdense wrote: »

Marriage Tax Allowance coupled with Personal Savings allowance
Query on entitlement
I have for 2016/17 earned income of £9257 and gross (and net) interest of £1159. The interest is not taxable under the personal savings allowance. The total income including interest is £10416 which is £586 less than the personal allowance of £11000. The fixed amount of marriage allowance transfer is £1100.
he complication is how to calculate the unused personal allowance; is it £586, meaning that no marriage allowance transfer is available or is it £1743 (11000 - 9257), ignoring interest, which means I can use the marriage allowance transfer as the £1100 transfer is less than the £1743 personal allowance left over.
All other requirements under Marriage Allowance Transfer are met.
Bit of a head scratcher this!
Any help would be welcome- Thanks

After you've got MAT in place, your new, reduced, PA is 90% of £11,000, i.e. £9,900

£9,257 of that entirely covers your non-Savings Taxable Income - so no tax to pay on that. This leaves £643 of PA to be applied to your Savings Taxable Income.

As it turns out, you have an extra £6,000 0% savings allowance on top of that £643, so you could have up to £6,643 of savings income and have no tax to pay.

One of Mr. Osborne's beneficiaries

Dazed_and_confused

nicebutdense

All interest which was previously taxable still is, there is no special allowance which makes it not taxable.

And in your situation you are unable to benefit from the Personal Savings Allowance 0% rate band. Some low income individuals are unable to get the benefit of the PSA and you are one of those.

But with the figures you quote by applying for Marriage Allowance you are making some of your savings income taxable at the starter savings rate band which is also 0% so you are effectively making yourself liable to have some income taxed but the tax rate is 0%

So ultimately agree with polymaff, you can apply and make yourself liable but not have any actual tax to pay as result.

System

Thanks everyone.