Marriage Tax Allowance-Husband made redundant

KittyT

My husband was made redundant in August 2018 (but earnt enough when he was working to benefit from getting the marriage tax allowance) and has not been working since. I have a part time job and didn't earn enough to pay tax last year so the marriage tax allowance worked for us last year. I am now trying to work as much overtime as possible and this will definitely mean I will pay tax this year. (1050n tax code). I have just cancelled the marriage tax allowance that I had previously given to my husband as he's not paid any tax this financial year. Apparently I can not take back my part of the tax allowance until April 2020 (by which time I hope my husband will have a job that pays more than me). I'm so confused.Have I done the right thing? Should I reinstate it if and when he gets a new job? I'd be grateful for any advice. Thank you.

Dazed_and_confused

If you are expecting both of you to be earning enough to pay tax from April 2020 then except in very unusual circumstances Marriage Allowance doesn't benefit you so you may as well leave that as it is.

Your husband cannot cancel it as that goes back to the start of the application and will cost him having to pay tax back.

What you seem to need to sort out is the current tax year. You may need to contact HMRC and explain the situation and see what they can do about the allowance in the current tax year i.e. how can your husband pass it back to you without disturbing any earlier tax years.

KittyT

That sounds like very sensible advice, thank you for your speedy reply.

Dazed_and_confused

With Marriage Allowance it seems to be best to try and keep it as simple as possible.

With an N tax code you may be paying a little more tax now than is really due but there is plenty of time to get it sorted.

Any excess tax deducted will be refunded once it's sorted even (and this is very very unlikely) if it isn't until after the end of the current tax year.

KittyT

Thanks again, I was a bit unsure about that n on the tax code and I've had issues with my employer and tax before. That is reassuring but I really hope it gets sorted soon as I'm losing quite a big part of my meagre salary.

Dazed_and_confused

N just means you are the Marriage Allowance applicant, it doesn't change the amount of tax payable i.e. 1050N and 1050L would both have the same amount of tax deducted.

But the N helps employers know what to upgrade your tax code to when the tax year changes.

KittyT

Oh, I think I need to pay more attention! Thanks

unholyangel

Dazed_and_confused wrote: »

If you are expecting both of you to be earning enough to pay tax from April 2020 then except in very unusual circumstances Marriage Allowance doesn't benefit you so you may as well leave that as it is.

Your husband cannot cancel it as that goes back to the start of the application and will cost him having to pay tax back.

What you seem to need to sort out is the current tax year. You may need to contact HMRC and explain the situation and see what they can do about the allowance in the current tax year i.e. how can your husband pass it back to you without disturbing any earlier tax years.

OP is going to be earning more than her reduced allowance this year though.

Her husband may be able to cancel it. Only HMRC can really answer that one. I can't say for certain, but I suspect its that way so HMRC don't get embroiled in domestic disputes/revenge cancels when a couple breaks up. There doesn't seem any apparent (to my mind at least) reason the husband shouldn't be able to cancel though.

KittyT

Thanks .I think I definitely need to speak to HMRC get it sorted as essentially I will pay tax on the bit I gave away to my husband.

sheramber

If the husband/ person who receives the allowance cancels it the cancellation takes effect back to the first year it was claimed so he would lose the allowance and have an underpayment for each year.

If the person who transfer the allowance , in this case the wife, cancels it the transfer continues until the end of the year in which it is cancelled. It is cancelled from the start of the following year.

That is the way the Marriage Allowance Transfer is set up.