Marriage Tax Allowance

akmoony

Hi
We got married in August'19, my wife didn't start work until Dec-2020 and I earned less than the higher tax band limit in 2019-2020 tax year. This year due to overtime I might cross the higher tax band limit, can we as a couple still claim the marriage tax allowance for the 2019-2020 tax year alone?

Dazed_and_C0nfused

No, you cannot "as a couple" claim anything.

But based on what you have posted your wife could apply for Marriage Allowance for 2019:20 and you would receive a £250 reduction in your tax liability for that tax year.

Your wife would get a reduced Personal Allowance of £11,250 which sounds like it would make no difference whatsoever to her.

As the recipient you do not take any part in the application process.

akmoony

Thanks very much. I just wanted to confirm that, last years claim will not be affected by this years non-eligibility.

Dazed_and_C0nfused

No, each year is independent.

If she applies for last last year it will normally be treated as an application for that one year only.

If she applied for the current tax year we are in the middle of it would continue in future years until such time as HMRC determined you (or her) were ineligible.

akmoony

Dazed_and_C0nfused said:

No, each year is independent.

If she applies for last last year it will normally be treated as an application for that one year only.

If she applied for the current tax year we are in the middle of it would continue in future years until such time as HMRC determined you (or her) were ineligible.

Excellent, all doubts cleared. Thanks

zagfles

How much will you be over the higher rate limit? If only a little might be worth considering reducing your taxable income (or extending your basic rate band) through pension contributions, or gift aid.

For instance if your income is only £400 into higher rate, that extra £400 will cost you £160 in tax and £250 in loss of MA, so you'll be £10 worse off for that extra £400 income! You could put it in a pension, whether private or your work pension, and you'd be £10 better off, or more if you use salary sacrifice as you'd save some NI too.

Or you could gift aid £320 to your favourite charity, which would increase your basic rate band by £400. Again you'd be £10 better off by making the donation.

akmoony

zagfles said:

How much will you be over the higher rate limit? If only a little might be worth considering reducing your taxable income (or extending your basic rate band) through pension contributions, or gift aid.

For instance if your income is only £400 into higher rate, that extra £400 will cost you £160 in tax and £250 in loss of MA, so you'll be £10 worse off for that extra £400 income! You could put it in a pension, whether private or your work pension, and you'd be £10 better off, or more if you use salary sacrifice as you'd save some NI too.

Or you could gift aid £320 to your favourite charity, which would increase your basic rate band by £400. Again you'd be £10 better off by making the donation.

Good thoughts, thanks. I think I'll over by a couple of grand. Also, I can't alter my pension contributions mid-year which is chosen at the beginning of the financial year.