Pension contribution and Marriage allowance

Ollabuddy

New to this but a log time lurker. My wife earns approx £13k pa through her work as a teaching assistant and pays a minuscule amount of tax by investing money into her LGPS AVC. Given that her taxable pay is going to all but disappear next tax year, could she give me her marriage allowance which would allow her to pay taxable money into her AVC? How long is it likely for HMRC to take to implement this so we can maximise benefits from next tax year.

Dazed_and_confused

If she applies for just the current tax year at the time with no backdating i.e. applies on say 10 April 2019 for the 2019:20 tax year then it seems to be very quick - a few days - going off the posts on the Cutting Tax board, it is earlier tax years which seem to cause problems.

If she applies for 2019:20 then she will get a reduced Personal Allowance of £11,250 and unless she has any other items in her tax code, job expenses being a MSE favourite, her code will be S1125N or 1125N.

I presume her AVC payments are under a net pay arrangement, not relief at source.

Remember if her taxable income exceeds £11,250 she will not only pay 19% (or 20% outside Scotland) on it but it will eat into her savings starter rate of tax although this may not be an issue with this being upto £5,000 and the savings nil rate being available after that.

Finally, this does not entitle you to any additional allowances, you get a fixed sum knocked off your tax liability for the year (£250 in 2019:20). Although to make sure you get the benefit during the year HMRC will provisionally increase your tax code allowances if you are employed or receive a pension.

If either of you become higher rate payers then HMRC will cancel her application and revert you to the original position.