Can we do this

barrowman

Just seen the Marriage Tax Allowance item and am wondering if we qualify.
I am a tax payer even though I am retired as I was fortunate enough to get a very good company pension. My wife is also a pensioner and only gets state pension.
So the question is can we make this claim?

Dazed_and_confused

So the question is can we make this claim?

No, "we" cannot make a claim.

Only one of you would apply/claim and from what you have posted it sounds like it would be your wife who would apply. She would then get a reduced Personal Allowance (£11,250 in the current tax year) and you would get a deduction of up to £250 off your tax liability.

You both need to remember two important things.

Firstly, most people are eligible for Marriage Allowance. In slightly simplistic terms if neither of you are liable to higher rate tax then you are both eligible.

But not everyone can

benefit

from Marriage Allowance. Your wife would need to consider her total taxable income for the year. Some people get a State Pension of £15k so just having a State Pension could mean she is eligible but would pay more tax by applying. Or it could make no difference if her State Pension is much smaller.

Secondly, if she is thinking of applying for previous tax years it is important she checks her taxable income in each tax year, her current circumstances could be significantly different to say 2015:16.

barrowman

I appreciate that only one can claim and that it is my wife who needs to do it.
Her income consists of state pension and the lower disability payment so her total annual income is £7079.80. As she is 75 and has not worked at all since around 1980 I guess we will have no problem going ahead with this including claiming for the previous years.
So early next year we will try.
I'll post back when I can give you an update.

Dazed_and_confused

Few things,

If the "lower disability payment" is a non taxable source of income then she should ignore this. Mentioning it to HMRC can only cause confusion/delay.

The 2015:16 tax year goes out of time after 5 April 2020 so she must apply by 5 April for that year to be included. But there is no point in leaving it until the last minute.

If you are over 85 (born pre 6 April 1935 I think) then it could be much more beneficial for you to apply for Married Couple's Allowance instead of your wife applying for Marriage Allowance.

Assuming it is Marriage Allowance that is applied for then once she has applied you should receive calculations from HMRC taking into account the Marriage Allowance tax credit (you get a deduction from your tax liability not any extra Personal Allowance). HMRC will take into account small amounts of tax you probably owe (but have previously been ignored) so your likely tax refund direct from HMRC will be c£890-895. Assuming you have paid sufficient tax each year and don't currently owe any tax (other than the small amounts previously mentioned).

You will also get a revised tax code for the current tax year and get a refund/adjustment for this tax year the first time your employer/pension payer uses the new code.