Marriage allowance query

vigman

Hi

I know I asked something about this a few years ago so apologise if I am repeating myself.

For years my wife was on a low salary eg £3,000 and I was on approximately £18,000

She applied for me to have her marriage allowance applied to me and this worked well getting us a refund for previous years into the bargain!

In 2018/19 I was taxed on the higher allowance through PAYE for a work and now state pension.

For the first time, for this period, my wife has just completed a self assessment as she started to get rental income taking her income to approx £15,000

When we did the calculations I worked out that her tax was going to be £751. However the demand is for £989.

Looking at this again I see that her calculation in SA was based on her having the full £11,850 allowance. Obviously HMRC has seen that the marriage allowance was in force and has taxed on her allowance being £10,660

I see that she must notify HMRC that her income has changed (although this can be seen in the SA return) so my questions are:

1. Shall we just leave the marriage allowance in place as our joint tax will be the same given our incomes

2.) Tell them about her change in income BUT when do we ask the marriage allowance to be removed from?

(If from 18/19 then my tax has already been calculated with the additional allowance and paid, and her 18/19 SA demand covers tax payment on £10,660 not £11,850)?

Am I right in assuming in this case, she should ask for the marriage allowance to be stopped from 2019/20?

TIA

Vigman

Dazed_and_confused

I see that she must notify HMRC that her income has changed

There is no need to do that, providing she is not deemed to be a higher rate payer then she is still eligible for Marriage Allowance

1. Shall we just leave the marriage allowance in place as our joint tax will be the same given our incomes

If you are confident it doesn't have any impact overall then there is no harm leaving things as they are. However your wife may not see it like that as it her who has the additional tax to pay each year

2.) Tell them about her change in income BUT when do we ask the marriage allowance to be removed from?

You have to be careful with this. The information on gov.uk has changed but it used to be the case that if you (the recipient) asked for it to be cancelled then it was cancelled all the way back to the first year your wife applied for. If she cancelled it then it continued until the end of the tax year she cancelled it in i.e. cancel today and she would get full Personal Allowance from 6 April 2020.

Am I right in assuming in this case, she should ask for the marriage allowance to be stopped from 2019/20?

That is really a question for your wife. But if she does want to do that then a call to HMRC might be the best way of doing it rather than doing anything online.

In 2018/19 I was taxed on the higher allowance through PAYE for a work and now state pension

When looking at the pros and cons of changing things you need to remember being the recipient of Marriage Allowance does not entitle you to an increased Personal Allowance. Your tax code is simply a provisional attempt at collecting the correct amount of tax and HMRC include Marriage Allowance as an extra allowance in your tax code to ensure you get the benefit during the year. The actual entitlement is a tax credit (£238 in the 2018:19 tax year) which is deducted from your tax liability This doesn't always make a difference but it can for some people.

vigman

Thank you so much for such a clear, quick and detailed reply.

I actually do all our tax affairs and all our money is pooled, so it makes no difference who pays more tax in that sense.

Given that, I think we will leave things as they are as it is permitted.

Thanks again

Vigman