Marriage Tax Allowance

Jocomp122

I applied for the Marriage Tax allowance, hubby earns between 10,500 and year and 11,000 a year. We both have several P800's through the post. I had a cheque for 650 pounds but hubby has had a bill for unpaid tax of 1100. I'm so confused as what to do. They say he'll have to pay 8.69 a month tax but how can this low amount cover his debt? He's very angry and worried as he suffers with stress about money. They've sent 4 different statements saying he owes 200 in 2015, 400 in 2016, 500 in 2017. So we are worse off than before. Not sure where to go from here, just wish I'd never applied for the stupid marriage allowance. Is it possible to give them the 650 back and go back to being on my old tax code.

Dazed_and_confused

Sounds like you didn't understand how Marriage Allowance works.

You start by saying you applied. In which case you could only ever pay the same tax or more.

You say you received £650 refund so in actual fact I think your hubby really applied.

HMRC will act on his instructions. Which is basically that he is happy to give up 10% of his Personal Allowance so that you can get a set amount knocked of your tax bill.

I think it is highly unlikely to be as bad as you (or he) fears.

Which tax years does your repayment cover? I'm guessing it's to 05:04:2018?

Are you certain your hubby actually owes £1,100. That would be very unusual for someone applying for Marriage Allowance. Unless they already owed some tax for another reason. Have you checked his calculations properly? Is the £200 included in the £400? Is the £400 included in the £500? So he actually only owes £500 not £1,100?

If so is this to 05:04:2018 as well?

If so you, as a couple, seem to be £150 better off.

You could always offer to give him £500 out of your refund. And he can then pay his tax bill with it.

Please let us know the true position. If it is really £1,100 there may be more to it.

Dazed_and_confused

They say he'll have to pay 8.69 a month tax but how can this low amount cover his debt?

If that is his 2018:19 tax code then it won't be paying the debt, whether it be £500 or £1,100. It is tax owed just for 2018:19. But remember you will be getting a tax reduction of about £20/month (you should have had a new tax code as well) so overall you as a couple would benefit.

I'm assuming you pay at least £20/month in tax before Marriage Allowance is considered.

Jocomp122

Looked through the paperwork again (apologies as I'm not very good with numbers) and it says in little writing that at the bottom the final total is the correct one as we roll the debt from one year to the next so he owes 541 tax not 1100. (Thank you Dazed and Confused for your help). This has stopped him having a panic as we have the 650 to pay for this. What confuses me as today we got two letters one saying his TAX code is 1250L and the other saying his tax code is 854N. Same date on both letters.

Dazed_and_confused

Have you checked the tax years on the coding notices.

Is 854N for 2018:19 and 1250L for 2019:20?

If so expect a change for 2019:20 to come through shortly. If he checks his Personal Tax Account then he may be able to see the new tax code for 2019:20 (assuming there is one?).

Overall it sounds like you are a marginal couple for Marriage Allowance, he is earning too much to be able to apply and still pay no tax but you are gaining by more than he loses so overall it is worthwhile, if a little confusing to start with!

Have you received a new tax code for 2018:19?

Jocomp122

Spoke to the tax office and I've got to pay the 541 hubby owes out of the 650 cheque I got, so we are 109 up on the deal. He is happy now, just got the faff of send off a cheque and saying goodbye to my 541. I don't suggest changing to this new allowance to anyone.

Jocomp122

Still don't understnd why someone who only earns a maximun of 11,000 a year has to pay 541 back for the last three years. Thanks for the advice. He has asked me to cancel the tax allowance as he will be worse off, so we are back to our old codes, hoepfully they won't send any more bills out. This has been a nightmare.

sheramber

The Marriage Allowance transfer 10% of the personal allowance from one person to the other.

The person who transfers the allowance now has a reduced personal allowance to set against their income.

So your husband's income is now more than his reduced personal allowance.

2015/16 personal allowance 10500 - 1060 = 9540

income 11,000 - 9540 = 1460 @20% = £292 tax due less tax already paid


2016/17 personal allowance 11,000 - income £11,000 = no tax due

transfer 10% as Marriage Allowance personal allowance now becomes 11,000- 1100= 9900

income £11,000 - personal allowance 9900 = taxable £1100 @20% =£ 220 tax now due

similarly 2017/18 personal allowance 111500 less 10% 1150 = 10350

income £11,000 less 10350 = 650 @ 20% -= £ 130 tax due

However, you gained the 10% personal allowance to reduce your liability hence you got a refund. So as a couple you gained £109. What is not to like?

When I transferred the allowance to my husband I had an underpayment of £80 but my husband got a rebate of £212. So, as a couple we were £132 better off.

Dazed_and_confused

However, you gained the 10% personal allowance to reduce your liability hence you got a refund. So as a couple you gained £109. What is not to like?

You can't please everyone!