Marriage Allowance

Dazed_and_confused

Asghar wrote: »

You seemed to understand and then seem totally clueless as to how the Marriage Allowance works.
You are transferring 10% of the Personal Tax allowance between yourselves, not gaining an extra 10%.She transferred 10% of her allowance to you meaning you can earn more before paying tax, so you got a rebate for £22

1.
Her allowance went down by 10% so she has to pay more tax on her income, so she gets charged the £221.

Why did your wife transfer some of her allowance to you if she was earning over £11,500, totally don't get it. You both seem to be earning over the personal tax allowance anyway.

The Marriage Allowance is there so that if one of you is not working, or not making full use of it, then they can transfer 10% of it to the other half so they pay less tax.
So if she was only earing £10,000 or £8000 or nothing, then she could happily transfer 10% of her unused £11,500 personal allowance to you and it would not affect her as she had no use for it.

HMRC approved the allowance transfer because you asked them to do it, it's not their fault.

I've read numerous posts on these forums stating that the HMRC staff are clueless, I personally think they are doing an excellent job considering the clueless calls they have to put up with.

Totally agree with this with one exception,

She transferred 10% of her allowance to you meaning you can earn more before paying tax

Marriage Allowance is not an extra allowance for the person receiving it. They simply get an amount deducted from their tax bill (the Marriage Allowance amount x 20%). It doesn't make much difference to most people but can make a huge difference (many thousands of £) to some.

polymaff

Just three of many pairs who were BS'ed into making an unthought-out application for MAT by the Lewises and HMRC. Still, they're unlikely to have lost financially - if you value time and expectation as worthless

And less emphasis on 10%, chaps. This year it is not 10% !

Asghar

polymaff wrote: »

And less emphasis on 10%, chaps. This year it is not 10% !

It's 10% plus £5.
So the transferable allowance is £1190 instead of £1185.

polymaff

It's 10%, and if the result is not a multiple of 10, rounded up until it is.

dori2o

JimboGSD wrote: »

Hello . I have had the same confusion, We claimed back the MTA since 2015 which is the first year it started. but we only claimed back this year. The application was in my wife's name as the lower tax payer between the 2 of us. Because we have claimed 10% of her tax allowance it stated that I would get £221 but she now owed £212 and then for 2016/2017 despite that she has earned no more apart from the poultry 1% Public Purse pay increase she now owes a further £221.20. They are currently assessing her underpayment for 2017/2018 and no doubt she will owe even more money even though the personal allowance has gone up. In this period I have received a cheque for £440 approx. Like you I totally fail to understand why they approve the allowance in one hand and take it back in the other. I only hope that in 2018/2019 that she will not pay any tax at all. Personally I wish we had not bothered in the first place.

When making a request for the marriage allowance transfer, it's not an application that HMRC can 'accept' or 'refuse', except in cases where either the recipient/transferor is earning in excess of the 40% rate.

The submission made is effectively an instruction to HMRC to transfer the allowance, which HMRC do not have the power to refuse as long as eligibility is established.

The assumption is that the transferor has read and understood the information.

When done online the transfer it completely automated, and so will be actioned without review. Again the only income restrictions the system looks for are earnings above the 40% limits.

As has been said earlier, people seem to forget, or not understand that this is not simply an allowance given to ones spouse, it is a transfer of 10% of THE LOWER EARNERS allowance. {slightly more in the current year given the transfer is 1190 allowances and not 1185, this is to ensure the full relief is given due to how tax codes work)

This reduces the lower earners allowance from 11850 to 10660 in the current year.

If the person transferring the allowance is earning below £10660, then tbey will have no tax liability, if they earn in between £10660 and £11850 then by reducing the allowance it will generate a tax liability, however, it may still be beneficial to the household to make the transfer.

If the transferor and recipient are earning over £11850 then there is no benefit to making the transfer.

I'm not at all suggesting it's the case with the examples given in this thread, but having dealt with many of these cases most of the time these issues have arisen because people have not read the information properly, didn't realise their income was above the personal allowance, or, had allowed their spouse to make the transfer for them online and hadn't read the information at all.

If you want to cancel the transfer it will apply from the start of the next tax year. Unless you can show that the transfer has been made incorrectly.

dori2o

Asghar wrote: »

You seemed to understand and then seem totally clueless as to how the Marriage Allowance works.
You are transferring 10% of the Personal Tax allowance between yourselves, not gaining an extra 10%.

She transferred 10% of her allowance to you meaning you can earn more before paying tax, so you got a rebate for £221.
Her allowance went down by 10% so she has to pay more tax on her income, so she gets charged the £221.

Why did your wife transfer some of her allowance to you if she was earning over £11,500, totally don't get it. You both seem to be earning over the personal tax allowance anyway.

The Marriage Allowance is there so that if one of you is not working, or not making full use of it, then they can transfer 10% of it to the other half so they pay less tax.
So if she was only earing £10,000 or £8000 or nothing, then she could happily transfer 10% of her unused £11,500 personal allowance to you and it would not affect her as she had no use for it.

HMRC approved the allowance transfer because you asked them to do it, it's not their fault.

I've read numerous posts on these forums stating that the HMRC staff are clueless, I personally think they are doing an excellent job considering the clueless calls they have to put up with.

As someone who has dealt with these calls I think thats a little bit harsh. But I agree that the vast majority of staff work hard and are far from clueless.

What this boils down to is that not enough people read the information given to them, and not enough know the basics of tax/tax codes etc.

All the information is freely available on the internet via the Gov. uk website.

I've been suggesting for years that more is done to include things like basic tax in the school curriculum for those about to leave and start working.

It would cost the Gov/HMRC nothing to send 1/2 experienced members of staff into local schools for such overviews to take place.

With the direction being taken by HMRC to make more and more services available online, and to possibly make some services online/self service only, it means that people are going to have to start understanding the basics.

In the past HMRC have done a lot of things for the taxpayer that they were not responsible for.

Tax is afterall the responsibility of the individual to ensure that the correct amounts are being paid, and to notify HMRC when necessary of changes that will affect liability.

However, after decades of doing it for people/ hand holding, that responsibility has been somewhat skewed.

If future policies on tax are to succeed then people need to learn the basics, especially if they are not going to be provided within the school environment.

polymaff

dori2o wrote: »

If the transferor and recipient are earning over £11850 then there is no benefit to making the transfer.

Not so.

MAT as implemented is indeed a complex and misunderstood tax measure.

QED