Marriage tax allowance

Tony1463

Hi 
can anyone help please,I am a retired male and my wife is claiming my marriage tax allowance at the moment.
After April I will be drawing down one of my pensions for £12,500 will that still be tax free ?
or will we have to inform tax office and stop her claiming before April.
Thanks for any help 

Dazed_and_C0nfused

Your wife cannot "claim" Marriage Allowance.

You must have applied for it.

If you have taxable pension income of £12,500 then you would pay tax on £1,250 of it.

If you want to get your Personal Allowance back to £12,500 then your wife could then have to pay £250/year more tax.  Could be swings and roundabouts.

Tony1463

Hi 
Thanks for your reply,yes sorry I applied for it.
so if we took that back off before April 2021 I could draw £12500 tax free in the new tax year 2021/2022?

Dazed_and_C0nfused

Yes but probably best to speak to HMRC as sometimes if you get it wrong they cancel it back to the start rather than just from the start of the next tax year.

sheramber

yes, but your wife would pay more tax as a result of losing the allowance.
Also, be aware if you draw   down that amount in one go you will   be taxed as it is assumed that is a monthly amount.
Either drawdown on a monthly basis or you will have to contact HMRC  to claim repayment of tax overpaid.

Tony1463

Hi 
Thanks for your reply 
my plan was to take 25% tax free from pension,then my £12500 which is my yearly allowance 
how does that work with the tax ?

Dazed_and_C0nfused

Do you mean take 25% TFLS of the whole pot all in one go or that 25% of each payment would be TFLS?

Tony1463

Hi 25% of the whole pot in one go then £12500 which is  my tax allowance,then I was going to draw £12500 for the next 3 years to empty what was left in pot 

elouise01582

If you draw £15,084 and based upon you continuing to donate the 10% marriage allowance from £12,570 you can have 25% of this amount tax-free and the remainder should be within your lowered personal allowance.  Your wife could keep the additional £250 she gets from the marriage allowance.  You may need to wait for the budget for confirmation of the £12,570 minus £1,257 confirmation.

molerat

The budget will be a formality on that one, HMRC are already issuing codes based on £12570 and £1260.

sheramber

They issue codes based in the current position. Any increase on personal allowances  in the March budget is actioned  later usually in June pay.
This is done by advising employers to amend the code operating specific to the letter following the code number.