Tax bill ☹️

NannaH

£500, apparently for overpaid marriage allowance for last year 20-21,   given that it’s only worth £244 a year,  how have they arrived at £500? 

DH’s last pay rise took him into 40% tax territory but he upped his salary sacrifice which we thought would bring him back under the limit, but I obviously miscalculated,  or his employer took months to up his sal sac. 

Whilst writing this, he’s just had another letter changing his tax code for this year to 1084 and saying he owes £147 - is that instead of the £500 for last year or in addition to it??   I’m assuming it’s the latter. 

p00hsticks

Are you sure that the bill is for £500 rather than that they'vr adjusted your tax code by 500 ?

Is this the first year you;ve applied ? In which case are you sure they've not applied the allowance all the way back to when it first came in ?

NannaH

It’s definitely a £503 bill.  It’s also definitely only for one year as the previous year is showing as ok online. 
That letter came yesterday and I checked online.
The £147 today, along with the tax code change, I can’t actually see on his gov uk account. 

The marriage allowance has been claimed for a good few years, even when I was working. 

I’m now wondering if the extra £260 is 40% tax on the £1220 allowance that shouldn’t have been claimed?  Although the maths doesn’t quite work out.

Dazed_and_C0nfused

HMRC provisionally allow Marriage Allowance by increasing your tax code allowances by £1260 (in 2020:21).

If you turn out to be a higher rate payer then that will be £504 owed (£1,260 x 40%).

NannaH

Yes, thanks, I’ve just sort of figured it out,  I’d got the allowance figure too low.
Still leaves the mystery £147 though for this tax year,  must be that the salary sacrifice didn’t bring it down quite enough?  

He sacrifices 8% of £54750. 

It says the £147 will be taken between now and next April.
The £503 will be taken in 12 instalments from next April, although I imagine he could pay it up front online?  No real point though. 

Dazed_and_C0nfused

If HMRC cancel it for 2020:21 due to being ineligible then I believe they also cancel it going forward as well.

If it turns out you are infact eligible for 2021:22 then you would need to contact them (or your spouse make a new application for 2021:22).

unholyangel

Dazed_and_C0nfused said:

HMRC provisionally allow Marriage Allowance by increasing your tax code allowances by £1260 (in 2020:21).

If you turn out to be a higher rate payer then that will be £504 owed (£1,260 x 40%).

I think you've made a typo. Personal allowance for 20-21 is 12500 so marriage allowance would be 1250. 

The few pounds extra will be the standard shortage caused by paye (including this for OPS benefit and not because I'm trying to teach you how to suck eggs!).

[Deleted User]

unholyangel said:

Dazed_and_C0nfused said:

HMRC provisionally allow Marriage Allowance by increasing your tax code allowances by £1260 (in 2020:21).

If you turn out to be a higher rate payer then that will be £504 owed (£1,260 x 40%).

I think you've made a typo. Personal allowance for 20-21 is 12500 so marriage allowance would be 1250. 

The few pounds extra will be the standard shortage caused by paye (including this for OPS benefit and not because I'm trying to teach you how to suck eggs!).

Yep - or just used wrong tax year - It’s 1260 for 2021/22

Dazed_and_C0nfused

unholyangel said:

Dazed_and_C0nfused said:

HMRC provisionally allow Marriage Allowance by increasing your tax code allowances by £1260 (in 2020:21).

If you turn out to be a higher rate payer then that will be £504 owed (£1,260 x 40%).

I think you've made a typo. Personal allowance for 20-21 is 12500 so marriage allowance would be 1250. 

The few pounds extra will be the standard shortage caused by paye (including this for OPS benefit and not because I'm trying to teach you how to suck eggs!).

You are quite right, not a typo, got my years mixed up. 

I should have realised it was wrong when the underpayment was less than expected.  As you say it should (normally) be a pound of two more due to the PAYE system!l.

More haste less speed!

Dazed_and_C0nfused

unholyangel said:

Dazed_and_C0nfused said:

HMRC provisionally allow Marriage Allowance by increasing your tax code allowances by £1260 (in 2020:21).

If you turn out to be a higher rate payer then that will be £504 owed (£1,260 x 40%).

I think you've made a typo. Personal allowance for 20-21 is 12500 so marriage allowance would be 1250. 

The few pounds extra will be the standard shortage caused by paye (including this for OPS benefit and not because I'm trying to teach you how to suck eggs!).

You are quite right, not a typo, got my years mixed up. 

I should have realised it was wrong when the underpayment was less than expected.  As you say it should (normally) be a pound of two more due to the PAYE system.

More haste less speed!