Cancelling marriage tax allowance

lhoney

Hello,

My current tax code is 1304M and my partner's is 1066N.

My partner has always worked part-time and so wasn't paying tax. We've had this allowance since April 2015. Last month my partner's hours were permanently increased, so from now on he'll be earning tax.

Which of us needs to cancel this allowance and when? I heard they backdate it to when we first changed codes if I cancel it, but does that mean HMRC will take back all the tax not paid since April 2015 even though he was below the bracket that whole time? I've checked the website and some posts on here but I'm finding it very confusing and a little worrying.

Thanks.

molerat

He needs to cancel, do it now and it will run to the end of this tax year. If you cancel it will be cancelled back to 2015 and you will have to repay the tax you saved.

Dazed_and_confused

You have to be careful you get this right otherwise you will end up owing c£900.

The person who applied and gave up part of their allowance is the one who should cancel it, that way the cancellation only applies from the start of the next tax year on 6 April 2019.

If the person receiving Marriage Allowance asks to cancel it then it is cancelled back to day one of the application.

Gov.uk has more info here,

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

If your circumstances change
You can cancel Marriage Allowance online. You’ll be asked to prove your identity using information HM Revenue and Customs (HMRC) holds about you.

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

lhoney

Thanks! That seems wrong though (making it so much much worse depending on who cancels I mean), and I bet a load of people fall foul of that. Couldn't anyone reapply to have the allowance backdated after it's been cancelled and claim all that back though?

Dazed_and_confused

Not "anyone" no.

Only the person giving away the allowance can ever apply for Marriage Allowance so lets say you'd be receiving it for 4 years.

Then you fell out big time and maybe separated or divorced.

Then your ex, who had applied for Marriage Allowance in the first place, cancelled Marriage Allowance and you had to pay back the tax benefit for 4 years.

Would that be fair on you?

lhoney

I didn't mean it like that, I meant if the higher-earner cancelled it and found themselves owing since the claim was made, couldn't the lower-earner put in a claim to have it backdated for them to get all that back?

Dazed_and_confused

I don't think there's anything stopping them although there is a 4 year time limit for a lot of tax things.

But you really wouldn't want all the hassle anyway

sheramber

lhoney wrote: »

I didn't mean it like that, I meant if the higher-earner cancelled it and found themselves owing since the claim was made, couldn't the lower-earner put in a claim to have it backdated for them to get all that back?

But that would mean the claim was reinstated as before and would need to be cancelled again.

lhoney

I thought the codes wouldn't change if both partners are currently paying tax but for the last few years one hadn't been?

Dazed_and_confused

You are getting mixed up with eligibility and benefit.

If both parties earn say £40k then either is perfectly eligible to apply for Marriage Allowance.

But overall as a couple they wouldn't benefit, one would save £238 whilst the other would pay an additional £238 (current tax year). But there is no rule stopping them from doing this if they wished.

This might actually be the position you and your husband would be in next tax year if you did nothing.

If the wrong person cancelled the claim then in theory it would be possible to claim again but it would involve 4 separate claims - once a tax year has finished you have to claim year by year, so one claim for 2015:16, one for 2016:17 and so on.

Only if you claim for the current tax year does the claim continue into later years.

Alimuh18

I know this thread has been quiet for a while but i'm hoping someone can help me/

I had the tax allowance from my wife since April 2015 she worked part-time.
She got a new job last week and now earns more then me.

What would be the best thing to do? It's a bummer that it carries on until 2020 but it also is a problem that you have to repay if you cancel?

Please advise.
Thank you.