Marriage allowance and higher rate tax

where_are_we

A person makes a contribution to a SIPP , which takes them below the 40% threshold, and results in only 20% income tax being paid. Does this mean that the person`s spouse, who is a non tax payer, can apply, successfully, for a marriage allowance transfer to that person?

Dazed_and_confused

In most cases yes.

The only exception would be if the person receiving Marriage Allowance had dividend income which would be taxed at higher rate if it weren't for the dividend nil rate of tax (otherwise known as the dividend allowance).

And the spouse being a non tax payer isn't necessary. Anyone who doesn't pay higher rate tax (or have the dividend issue mentioned above) is eligible. Most won't be able to benefit (as part of a couple) but some people can make themselves pay tax by applying and still be better off overall as part of a couple.

kitty5

My husband and I are in exactly the same position as this and our claim has been refused as HMRC are claiming he is a higher rate tax payer. He paid tax at the basic rate after contributions to a SIPP. Not sure wether to dispute.

polymaff

You can be classified as being a higher rate taxpayer without having paid any tax at higher rate.

Can anyone quote an example where pension contributions have ever opened the door to MAT?

xylophone

https://www.taxation.co.uk/Articles/2015/05/12/333044/seven-steps-heaven

https://ion.icaew.com/taxfaculty/b/weblog/posts/the-mechanics-of-the-marriage-allowance

A relative (pensioner under 75) would be a higher rate tax payer if he did not use the facility to contribute £2880/£3600 to his SIPP.

All being well he'll reach his 75th but the taxman cometh....:eek: