Tax issues with Marriage Allowance

potts8

Dazed_and_confused wrote: »

Firstly you cannot "claim" Marriage Allowance. If necessary your spouse would have to apply again.

But if your P60 showed £45k then you would be higher rate for 2016:17.

The Personal Allowance was £11,000 and basic rate band was £32,000 so income of £45k puts you firmly into the higher rate band.

Agree on the claim part it was just a figue of speech.
Also agree with everything you've said it's just the pension aspect that is then causing me confusion.
I paid 4k into my pension that year so doesn't that mean my taxable income is then calculated at 41k so I have then paid no tax at the higher rate thus eligible for the marriage allowance?

xylophone

https://www.taxadvisermagazine.com/article/marriage-allowance

There are several requirements to be satisfied for a claim to be successful.

The parties to the claim should be married or in a civil partnership for at least part of the tax year to which the claim relates (and be in that relationship at the time the election is made);
Neither partner should pay tax higher than at the basic rate;

Did you pay tax at the basic or higher rate in that tax year?

potts8

xylophone wrote: »

https://www.taxadvisermagazine.com/article/marriage-allowance

There are several requirements to be satisfied for a claim to be successful.

The parties to the claim should be married or in a civil partnership for at least part of the tax year to which the claim relates (and be in that relationship at the time the election is made);
Neither partner should pay tax higher than at the basic rate;

Did you pay tax at the basic or higher rate in that tax year?

Nope, neither of us paid higher rate tax that year due to my pension contribution.

Asghar

xylophone wrote: »

The parties to the claim should be married or in a civil partnership for at least part of the tax year to which the claim relates (and be in that relationship at the time the election is made);

Just wondering, how does HMRC actually check if the couple are married?

Dazed_and_confused

So my P60 for 16/17 which is the year in question for my issue with the underpayment is 45k earnings and I paid £4050 into my pension including relief at 20%

The only yeah this can be resolved is if you can explain exactly what these pension contributions were.

If they reduced the income so your P60 figure was less than it would otherwise have been it cannot be "relief at source".

If it was relief at source have you actually told HMRC about these pension contributions?

It looks as though the answer all revolves around the pension contributions.

potts8

On my P60 my "Total pay for this employment" doesn't reduce due to my pension payments.


My work pension is calculated on my gross pay and taken from my net pay. Scottish widows already claim the 20% relief and add that automatically and I then have to call HMRC every year to claim the additional 20% which they resolve by changing my tax code every year.

sheramber

paying £523 due to an underpayment of tax from a previous year.

From phoning HMRC they are telling me this is because although I had previously had the MA benefit from 16/17 the calculation after had deemed that I wasn't eligible.

MA for 16/17 is not worth £523.

There must be more than that. Perhaps the pension payments have been overlooked resulting in the larger underpayment.

Dazed_and_confused

Someone receiving MA during the year but ultimately not being entitled to it due to being higher rate would often owe (for 2016:17) c£443 so that just leaves around £80 for other reasons.

If the pension was paid out of post tax pay and received relief at source then it does seem that the basic rate band would be high enough to take the op out of being a higher rate payer for 2016:17.

In the absence of the P800 calculation possibly the best option is for the op to ask HMRC to either provide a copy of this for 2016:17 or get them to confirm exactly what relief at source pension contributions they have taken into account for that year.

potts8

I believe I've made some really good progress today and managed to get through to someone who sounded like they knew what they were talking about at HMRC.
Turns out I don't have an issue at all with marriage allowance even though thats what 2 previous advisors had mentioned.
I've had underpayments for the last few years simply as the difference for what I have claimed as personal pension relief and what I actually earned.

I can only assume the previous advisors only see my earning on P60 and don't take into account the pension payments I make to avoid high rate tax and remain eligible for marriage allowance.