Marriage Tax Allowance Advice Please

LivesinKent

Hello I am new here so I hope I have put this post in the right section!
I contacted HMRC 2020 to arrange marriage tax allowance as I am a housewife and f/t mum. I ended up owing HMRC around £200. I may be returning to work over the coming months. I am conscious of the new tax year starting soon! So I was thinking of contacting HMRC to cancel the MTA. I really have no idea how this could impact me and my husband in terms of owing further money, when is the best time to cancel, if I leave things as they are and start working, how will this impact my wages etc??
I think MTA is very confusing and when I spoke to HMRC, they basically said they cannot give advice, it is my decision and that was pretty much it. Please could someone explain how it all works and answers my questions above if possible. Thank you so much. 

AskAsk

here is information on how it works

https://www.gov.uk/marriage-allowance

LivesinKent

Thank you, I have already looked at that but it does not really answer my questions. 

annabanana82

As I understand it you can't stop mid tax year so you'd need to cancel soon. If you're earnings are lower than than your reduced tax threshold there may be some benefit to continuing I think? 
It may be worthwhile reposting in the benefits boards as there are others far more knowledgeable than myself but I've not seen them post in this board

Savvy_Sue

annabanana82 said:

As I understand it you can't stop mid tax year so you'd need to cancel soon. If you're earnings are lower than than your reduced tax threshold there may be some benefit to continuing I think? 
It may be worthwhile reposting in the benefits boards as there are others far more knowledgeable than myself but I've not seen them post in this board

I'd have thought Cutting Tax rather than Benefits.

But it's hard to see how you owed them money with no taxable income. 

annabanana82

Savvy_Sue said:

annabanana82 said:

As I understand it you can't stop mid tax year so you'd need to cancel soon. If you're earnings are lower than than your reduced tax threshold there may be some benefit to continuing I think? 
It may be worthwhile reposting in the benefits boards as there are others far more knowledgeable than myself but I've not seen them post in this board

I'd have thought Cutting Tax rather than Benefits.

But it's hard to see how you owed them money with no taxable income. 

Yes, I was just thinking where I see the posters that have the answers, I don't think I pay enough tax to frequent that board :-)

Savvy_Sue

-:) I can confirm they are quite friendly and more importantly they know what questions need to be answered before they can suggest the answer.

sheramber

The person with lower income  (A)   can transfer part of  their personal allowance to the higher paid one  ( , if that person is not liable to higher rate tax.
 So A's personal allowance is reduced by 10% and B's is increased by the amount.
if A's income is   below the reduced  personal  allowance then they will still pay no tax. But if there icome is not as low as that then they will become liable to tax on the amount no longer covered by personal allowance.
e.g
A  personal allowance 12500 - MTA 1250 = 11250
A's income  is 10,000 . It is still covered by the personal allowance of 11250 so no tax due.
But if A's income was 12000 it would no longer all be covered by the reduced PA so would be due to pay tax on the excess.
12000 - 11250m = 750  @20%
But B would get the full reduction in their tax liability of 11250  @20%
So, as a couple they are better off . 
The extra tax due by A is offset by the larger refund to B.

..................
To cancel you need to do it now to have effect from 5 April

If you’re cancelling for another reason, the person who made the claim must cancel.

Online

You can cancel Marriage Allowance online. You’ll be asked to prove your identity using information HMRC holds about you.

By phone

Contact Marriage Allowance enquiries to cancel or get help.

Marriage Allowance enquiries
Telephone: 0300 200 3300
Telephone from outside the UK: +44 135 535 9022
Monday to Friday: 8am to 8pm
Saturday: 8am to 4pm
Find out about call charges

After you cancel

If you cancel because of a change of income, the allowance will run until the end of the tax year (5 April).

Slinky

sheramber said:

The person with lower income  (A)   can transfer part of  their personal allowance to the higher paid one  ( , if that person is not liable to higher rate tax.
 So A's personal allowance is reduced by 10% and B's is increased by the amount.
if A's income is   below the reduced  personal  allowance then they will still pay no tax. But if there icome is not as low as that then they will become liable to tax on the amount no longer covered by personal allowance.
e.g
A  personal allowance 12500 - MTA 1250 = 11250
A's income  is 10,000 . It is still covered by the personal allowance of 11250 so no tax due.
But if A's income was 12000 it would no longer all be covered by the reduced PA so would be due to pay tax on the excess.
12000 - 11250m = 750  @20%
But B would get the full reduction in their tax liability of 11250  @20%
So, as a couple they are better off . 
The extra tax due by A is offset by the larger refund to B.

..................
To cancel you need to do it now to have effect from 5 April

If you’re cancelling for another reason, the person who made the claim must cancel.

Online

You can cancel Marriage Allowance online. You’ll be asked to prove your identity using information HMRC holds about you.

By phone

Contact Marriage Allowance enquiries to cancel or get help.

Marriage Allowance enquiries
Telephone: 0300 200 3300
Telephone from outside the UK: +44 135 535 9022
Monday to Friday: 8am to 8pm
Saturday: 8am to 4pm
Find out about call charges

After you cancel

If you cancel because of a change of income, the allowance will run until the end of the tax year (5 April).

We've tried doing this online before and can't get it to work. That link takes you to where you can apply for the MTA, we can't find anywhere to cancel an existing one. Going to have to try and phone.

Savvy_Sue

If phoning, my experience is that it's worth trying BEFORE they are officially open for business, and definitely earlier in the day rather than later. 

AskAsk

LivesinKent said:

Thank you, I have already looked at that but it does not really answer my questions. 

it means that you must have given part of your personal allowance to your husband as you were not working in 2020.  i am not sure how you have ended up with a tax liability if you said that you were not working, unless you worked part way.  hmrc should have given you an explanation of how you have ended up owing them money.

if you notify them that you no longer wish to use the marriage tax allowance, it will take effect from the next tax year, that is starting from 06.04.2021.  if you are going to be working in the next tax year then giving your allowance to your husband would make little sense.

personal tax allowance is the amount that will be deducted from your gross taxable earnings before any tax is applied.  it is a tax free amount of earnings before you get taxed.

as i understand, you can only give £1,260 of your personal allowance for the next tax year, and this is paid as a tax credit to your husband of 20% x £1,260 = £252.  however, it means that your tax free amount of earnings will reduce by £1,260 so makes little sense to transfer this if you are going to start working.