I need help with the marriage tax allowance please

hostertlady

Following Martins advice on the tellybox a few weeks ago , We applied for the married tax allowance going back 4 years like he said we could, 
but yesterday I received in the post that i owed tax from 2018-2019 tax year( £238.00).. ( i semi retired years ago, I only do voluntary stuff now)
yet in the same post hubby got 4 letters of tax , and a cheque for £251.45.

letter 1 2016-2017(you owe HMRC £254)
letter 2 2017-2018( you owe HMRC £168)
letter 3 2018-2019(( you owe HMRC £133)
letter 4 2019-2020.( HMRC owes you £251,45)
 
he got a refund of £251.45 for 2019-2020 tax year) he is employed and PAYE. so his tax is taken at source.
is it just coincidental that I apply to transfer my allowance over to him and then he gets a refund yet i owe?
In one hand and out of the other.
Or am i being thick?

JGB1955

That's how it works.  You, presumably, were earning over the personal allowance in those previous years.  If not... time to check your previous tax year's submissions.

Grumpy_chap

To really benefit from Marriage Allowance, the lower earner needs to be below personal allowance (£12.5k for most) and the higher earner must be basic rate tax payer (below £50k for most).  

Then £1,260 of the lower earner's personal allowance can be transferred to the higher earner, so saving 20% on that amount.

But, this may then take the lower earner's income above the personal allowance.  For example, lower earner at £12k income, but £12.5k personal allowance, so there is only £500 unused but transferring the full £1,260 allowed to the higher earner means the lower earner becomes liable for some tax on the gap.

That is not always the easiest thing to explain, so maybe the link below will help:
https://www.gov.uk/marriage-allowance

sheramber

You are saying that you transferred marriage allowance to your husband and he now has a underpayment of tax for three of the years.

What reason have HMRC given for the underpayments?

By transferring the marriage allowance got him you would expect him to be due a repayment as happened for 2018/19.

Dazed_and_C0nfused

hostertlady said:

Following Martins advice on the tellybox a few weeks ago , We applied for the married tax allowance going back 4 years like he said we could, 
but yesterday I received in the post that i owed tax from 2018-2019 tax year( £238.00).. ( i semi retired years ago, I only do voluntary stuff now)
yet in the same post hubby got 4 letters of tax , and a cheque for £251.45.

letter 1 2016-2017(you owe HMRC £254)
letter 2 2017-2018( you owe HMRC £168)
letter 3 2018-2019(( you owe HMRC £133)
letter 4 2019-2020.( HMRC owes you £251,45)
 
he got a refund of £251.45 for 2019-2020 tax year) he is employed and PAYE. so his tax is taken at source.
is it just coincidental that I apply to transfer my allowance over to him and then he gets a refund yet i owe?
In one hand and out of the other.
Or am i being thick?

All HMRC do is check if you are both eligible and if so allow the application to proceed.

Husband and wife both earning £40k are eligible but there usually would not be any benefit in applying.

We're your husbands calculations cumulative P800's i.e. the £254 from 2016:17 was included in the 2017:18 calculation and so on?

Or are they independent of each other?

It may be he owed much more that and Marriage Allowance tax credits have reduced the amount he owed.

Why did you apply for 2018:19?

hostertlady

Dazed_and_C0nfused said:

hostertlady said:

Following Martins advice on the tellybox a few weeks ago , We applied for the married tax allowance going back 4 years like he said we could, 
but yesterday I received in the post that i owed tax from 2018-2019 tax year( £238.00).. ( i semi retired years ago, I only do voluntary stuff now)
yet in the same post hubby got 4 letters of tax , and a cheque for £251.45.

letter 1 2016-2017(you owe HMRC £254)
letter 2 2017-2018( you owe HMRC £168)
letter 3 2018-2019(( you owe HMRC £133)
letter 4 2019-2020.( HMRC owes you £251,45)
 
he got a refund of £251.45 for 2019-2020 tax year) he is employed and PAYE. so his tax is taken at source.
is it just coincidental that I apply to transfer my allowance over to him and then he gets a refund yet i owe?
In one hand and out of the other.
Or am i being thick?

All HMRC do is check if you are both eligible and if so allow the application to proceed.

Husband and wife both earning £40k are eligible but there usually would not be any benefit in applying.

We're your husbands calculations cumulative P800's i.e. the £254 from 2016:17 was included in the 2017:18 calculation and so on?

Or are they independent of each other?

It may be he owed much more that and Marriage Allowance tax credits have reduced the amount he owed.

Why did you apply for 2018:19?

Because martin lewis said to apply for the last 4 years! see! I told you I didn't have a clue..
I really don't understand all this tax milarky..
I am going to print all these answers out and read through them and try and make sense of it all..
It just seems that whenever hubby gets any kind of tax rebate, they always seem to ask for it back by saying 
he hasn't paid enough .. He had another one last year too..( for £512.05)

hostertlady

 JGB1955     This is the first time for a long time i have received anything from the tax office apart from 2018 when i cashed my stake holder pension in and paid a shed loads of tax, but got a fair dollop of it back.. so i thought i was up to date with everything..i have no understanding whatsoever of it all, i just do as i am told 

Dazed_and_C0nfused

Nobody has told you to apply for 4 years of backdated Marriage Allowance.

Martin Lewis may well have suggested it is something people should consider/look into but that's all.  Surprisingly even he doesn't know everyone's financial circumstances 

If your husbands calculations are cumulative then it may well have saved him c£900 in tax.

So overall as a couple you might be c£700 better off.

But you really do need to understand what you have done and the consequences.  Until you have done that you have no idea if you actually need any help.

Ant555

@hostertlady
>In one hand and out of the other.
>Or am i being thick?

We have benefitted from applying back-dated for 3 previous years but this current tax year its not a huge benefit to us.

By way of example (ill round the figures to keep it simple as this is how I can understand it) - my wife earns £12570 this year so should pay no tax as thats exactly the limit of the normal personal allowance tax code 1257L .  However, as we have transferred £1260 of her allowance to me, her tax free earnings are now reduced to £11310 so she is due to pay tax on 1260 of her earnings @ 20% = £252 of tax.

I however have boosted my tax free earnings by £1260 due to the transfer of allowance so can earn that much more before getting taxed - I will benefit by paying £252 less tax this year.  As a family, we are not better off this year (we were the previous 3 years though)

In our situation this year it has little benefit - 'in one hand and out of the other' as you point out. If the lower earner earns just under the tax free allowance then it looks like its of marginal benefit for some and not a guaranteed windfall - as I did originally think myself until I posted a previous question on this board and if I understood it all correctly then the above is valid, if I have misunderstood then I am happy to be corrected.

hope this helps

molerat

Similar here.  This year MrsM will pay £136 tax due to her reduced allowance but I will pay £252 less tax so as a couple we still receive some benefit. The coming years with a static PA and inflationary income increases will possibly do away with any benefit to us but my spreadsheet will keep a close eye on it.