Change married allowance?

vigman

Until now, I have used the married tax allowance because I was earning £24500 from pensions and my wife only about £1000.

For the tax year 2018/19 onward it looks like her income from an inherited rented property will be £12500.

I immediately thought I ought to give her back my married allowance and that we should both be on the same basic allowance to sort out our tax affairs.

However doing the calculations with income over and under the tax allowance and using basic and married allowances it seems to be better keeping the married allowance as if both are over the taxable limit the tax is the same but if my wife is under the taxable limit it is better me keeping the married allowance? Is this correct please?


With MA Gross Income Taxable 20% Tax
H £13,035.00 £24,500.00 £11,465.00 £2,293.00
W £10,665.00 £13,000.00 £2,335.00 £ 467.00
£2,760.00


H £11,850.00 £24,500.00 £12,650.00 £2,530.00
W £11,850.00 £13,000.00 £1,150.00 £ 230.00
£2,760.00


H £13,035.00 £24,500.00 £11,465.00 £2,293.00
W £10,665.00 £ 9,000.00 £ 0.00 £ 0.00
£2,293.00

H £11,850.00 £24,500.00 £12,650.00 £2,530.00
W £11,850.00 £ 9,000.00 £ 0.00 £ 0.00
£2,530.00

I also read somewhere that if you reverted back from the married allowance it seemed that the person on the married allowance had to pay back the tax rebate gained in the past (valid) years. Is this correct please?

Finally, why does a self assessment tax form have to be completed if rental income is only £2500 - £11,849 per year and under the personal allowance?

As always any confusion in my postings at the moment is down to large doses of morphine based painkillers...!!

The figures and headers were in clear columns before submitting. Apologies for the odd formatting on posting

TIA

Vigman

kidmugsy

I was under the impression that if her income is £13,500 you're not entitled to the marriage allowance. I suggest you google it.

vigman

kidmugsy wrote: »

I was under the impression that if her income is £13,500 you're not entitled to the marriage allowance. I suggest you google it.

Doh! Of course the marriage allowance can only be used if one earner has an income below the basic allowance.

Hopefully her gross income of £12500 will be reduced to below the tax threshold after allowable expenses

Thanks

Vigman

sheramber

cancelling marriage allowance

The date the allowance ends depends on who cancels it.

If you stop transferring the allowance to your partner, it will run until the end of the tax year (5 April).

If your partner asks to stop receiving your allowance, HMRC will backdate the change to the start of the tax year you first started transferring it.

https://www.gov.uk/marriage-allowance/if-your-circumstances-change

vigman

I did read that thanks. It seems odd to me that in the second scenario you lose the genuine tax advantage that for example in my case was valid for the last two years? If it is backdated to the beginning of the requested change to Married Allowance rates I assume you repay the tax credit received (2 X £200 approx) for those two years?

Why should it make a difference who requests the change anyway?

On my other point why should someone complete a self assessment for £2,500 rental income when no tax is due on it if this is the sole income? Why not complete a self assessment when the rental amount is the same as the tax allowance rate?

TIA

Vigman

Dazed_and_confused

Providing neither of you are into the higher rate tax band there is nothing to stop you continuing with Marriage Allowance in place.

There is no rule which means the person giving up 10% of their allowance has to have income of less than the personal allowance. In fact with the proliferation of 0% tax bands you could in theory have £20,000+ income (of the right sort) and still not have any tax to pay even if you had applied for Marriage Allowance and receive the reduced Personal Allowance.

One thing to consider is that you aren't entitled to any extra allowance. Your wife applying entitles you to a reduction in your tax liability, not any extra allowances. It may not affect you but it can have devastating (financial) consequences if you get this wrong.

Basically work out your tax due ignoring Marriage Allowance and then knock £238* off the bill.

*According to gov.uk from April 2018 Marriage Allowance is no longer 10% of the personal allowance but will be £1190 next year.

The example you give regarding your wife seems to be a perfect example of why a self assessment return is needed even when income is less than the personal allowance. If she had taxable income of £11849 and Marriage Allowance was still in place she should be paying £237.80 in tax.

kidmugsy

gov.uk: "You can get Marriage Allowance if all the following apply:

you're married or in a civil partnership
you don't earn anything or your income is £11,500 or less
your partner's income is between £11,501 and £45,000 (or £43,000 if you're in Scotland)"

Whether that's an accurate summary of the law I don't know, but it is an official summary.

vigman

Thanks 'Dazed and Confused'

If my wife's income was £11,849 I see that the joint total tax would still be the same (pence rounded up) whether the marriage allowance is applied or not so in this instance would it be easier to revert to standard allowances and not have my wife fill in a self assessment?



H £13,040.00 Income £24,500.00 Taxable Income £11,460.00 Tax £2,292.00
W £10,660.00 Income £11,849.00 Taxable Income £1,189.00 Tax £237.80
Total Tax £2,529.80

H £11,850.00 £24,500.00 £12,650.00 £2,530.00
W £11,850.00 £11,849.00 £0.00 £0.00
Total Tax £2,530.00

I was wondering why a self assessment form was necessary if the wife's income was only £2500 from rental as in the HMRC rules?

Also please could you clarify: "One thing to consider is that you aren't entitled to any extra allowance. Your wife applying entitles you to a reduction in your tax liability, not any extra allowances. It may not affect you but it can have devastating (financial) consequences if you get this wrong.

It is definitely me that should be called Dazed and Confused!

TIA

Vigman

polymaff

kidmugsy wrote: »

gov.uk: "You can get Marriage Allowance if all the following apply:

you're married or in a civil partnership
you don't earn anything or your income is £11,500 or less
your partner's income is between £11,501 and £45,000 (or £43,000 if you're in Scotland)"

Whether that's an accurate summary of the law I don't know, but it is an official summary.

Have you still not recognised that this nonsense on gov.uk is just that - nonsense?

The point has been made again and again on MSE.

polymaff

Dazed_and_confused wrote: »

Providing neither of you are into the higher rate tax band there is nothing to stop you continuing with Marriage Allowance in place.

There is no rule which means the person giving up 10% of their allowance has to have income of less than the personal allowance.....

Yes there is. Don't make the same mistake - but in reverse - HMRC seems to have made.

There are TWO sorts of acceptable applicant for MAT. Basically:

1. Those who are UK resident for tax purposes can apply so long as they are not - or would not, after MAT, be - higher-rate tax payers.

2. Those who are NOT UK-resident for tax purposes can only apply if their taxable income is no more than their personal allowance.

HMRC seem to have ignored case 1 - don't you ignore case 2

kidmugsy

polymaff wrote: »

Have you still not recognised that this nonsense on gov.uk is just that - nonsense?

The point has been made again and again on MSE.

Why not give us a link to your source?