Marriage Allowance - Help Needed

NewburyVilla

Hi 

I wonder if someone could help me with my question. I’m a son who is helping their parents apply for marriage allowance. 

The non tax payer (mom) receives £12,220 per year (below £12570 threshold) . This income is from state pension & attendance allowance ONLY. She doesn’t receive a work pension.
What happens to her income (state pension & attendance allowance) if 10% is transferred to her husband & that takes her above her new personal allowance threshold of £11,310? She is now £910 over the new threshold

Her husband, who she intends to give her 10% to, earns £15000 per year before tax. This is from state & work pensions 

Any help would be appreciated. Apologies if I’ve asked on that wrong forum 

Dazed_and_C0nfused

Attendance allowance isn't taxable so you need to ignore that.

To answer your question though if she had taxable pension income (or earnings) of £12,220 and a Personal Allowance of £11,310 she would owe £182.  Which she would have to pay direct to HMRC.

Her husband would get a tax reduction of £252.  So as he is paying more than that he will get the full benefit and, as a couple, they will be £70 better off overall.

This is an example of why the person agreeing to the reduced Personal Allowance has to apply, otherwise her husband could make her pay tax even if she didn't want to.

But if her Attendance Allowance is at least £910 she won't have any liability and, as a couple, they will see the full benefit.

Is she considering applying retrospectively or just for the current tax year onwards?

NewburyVilla

Thanks for your reply. It’s much appreciated. Yes we will be applying retrospectively for the 4 years 

So just to confirm. We can ignore my moms attendance allowance & the only income they would use is her state pension, which is roughly £7566 per year? 

Dazed_and_C0nfused

Yes.  Plus any bits of untaxed interest banks/building societies have reported to HMRC.

She doesn't need to tell HMRC about her income.  They will automatically recalculate her tax liability for each year with the reduced Personal Allowance and from what you have posted she will be in the same position after applying, no tax will be payable by her.

Unless his income was quite a bit less in any tax year her husband will get the full benefit for each tax year she applies for.

Unfortunately she has just missed out on being able to apply for 2017:18,.  The first year she can apply for now is 2018:19.

NewburyVilla

Just want to say, thank you for the information. I called up this morning & applied over the phone for my parents. We’ll hear back in 30 days. All being well, we should get a nice rebate 

thank you