Marriage Allowance - cancelling and backdating

Zanderman

Paulleach said:

An important point on Married Persons Allowance for 2024/25
The proposed state pension for 24/25 is £221.20 which doesnt sound a fortune but is an annual rate of £11502.40 which is higher than the allowance left after swapping the Married persons allowance to a partner, which only leaves £11,310. 
You cant cancel it in year if it's just because your income changes, which effectively it does, so, if i understand it correctly, lots of people will need to cancel the married persons allowance this year or pay tax of around £38.74 at the end of the tax year. Presumably  they will have to fill in a tax form too.
Does anyone else think my understanding is correct?

Whether it's worth cancelling to save the £38 in tax depends, really, on where that leaves the taxable income of the spouse who currently has the enhanced personal allowance. As it would lower their PA and so they might pay more tax, possibly more than that £38. So it depends entirely on your joint situation. Horses for courses. This is the problem, of course, that is the theme of the thread - you can't cancel for the current tax year, only for the next one, but you don't know what your income will be for that yet.

But (edited to add) as concluded above and suggested by sheramber you can cancel for next year and then, if you think you might need once next year is happening, you can restart for that year, but cancel for the following one - and so on, every year, taking each one at a time. So yes, it may be worth cancelling now, and restarting when you know it's worth it, if it is. 

(btw assumptions about PA are risky in an election year!)

Should be no need for a tax form, if I understand things correctly, if the only income is pensions.

molerat

Paulleach said:

An important point on Married Persons Allowance for 2024/25
The proposed state pension for 24/25 is £221.20 which doesnt sound a fortune but is an annual rate of £11502.40 which is higher than the allowance left after swapping the Married persons allowance to a partner, which only leaves £11,310. 
You cant cancel it in year if it's just because your income changes, which effectively it does, so, if i understand it correctly, lots of people will need to cancel the married persons allowance this year or pay tax of around £38.74 at the end of the tax year. Presumably  they will have to fill in a tax form too.
Does anyone else think my understanding is correct?

As a couple though, after all this is what it is all about, you are still better off, just £38.74 less better off.  

MrsM & myself have been running like this for a few years now. Next year though the benefit runs out and we are cancelling, the extra £1260 interest she can earn is better than the now limited benefit we are receiving from the MA which is only down to the difference gained by the 19% Scottish tax rate.

sheramber

I paid tax of £80 but my husband got the full benefit of the transfer , so as a couple it was still advantageous for us,

[Deleted User]

Paulleach said:

An important point on Married Persons Allowance for 2024/25
The proposed state pension for 24/25 is £221.20 which doesnt sound a fortune but is an annual rate of £11502.40 which is higher than the allowance left after swapping the Married persons allowance to a partner, which only leaves £11,310. 
You cant cancel it in year if it's just because your income changes, which effectively it does, so, if i understand it correctly, lots of people will need to cancel the married persons allowance this year or pay tax of around £38.74 at the end of the tax year. Presumably  they will have to fill in a tax form too.
Does anyone else think my understanding is correct?

It’s an interesting question. The HMRC has what known as ‘tolerances’ where they do not pursue small amounts. For example, those on PAYE who are basic rate taxpayers and do not complete a tax return can underpay up to £1.80 every year which is not collected. 

I imagine that £38.74 is below this tolerance and will not be pursued. 

NickPapagiorgio

The then HMRC Chairman (solicitor Sir Edward Troup) presided over a Digitization Initiative in 2015-16 and the plan was to:

- Close 137 out of 170 offices

- Significantly reduce staff

- Implement robust IT systems to streamline and handle the processing of UK taxation.

Significantly less staff you say?...we'll be the judge of that.

Here are the HMRC headcount figures for the last decade.

                                 2014      2024

Junior                       34478        17784         - 49%

Executive Officer     15533         14630         - 6%

Senior/Higher EO    14052         24083         + 71%

Grade 6/7                  4156           8836         + 112%

SCS                             308             509         + 65%

External Consultants   125           1964         + 1,471%

Total Headcount       69439        67816          -2.4%

Summary:

Junior roles have been slashed.

Middle roles are slightly down.

Management roles have grown significantly.

It's bonus time for external Consultancies.

The Digitization Initiative failed spectacularly and HMRC is a total s**t-show, having ended up with:

- Very few offices

- Marginally less staff overall

- Far fewer people in customer contact roles (which is why you can't easily contact anyone at HMRC)

- Existing experienced staff promoted into non-jobs on higher salaries

- External Consultancies - Bonanza time

- IT systems barely fit for purpose that cost a fortune to maintain

- Staff morale at 'self harming' level.

It's probably not the 'Legacy' that Sir Edward wanted.

With regard to Marriage Allowances, where John has transferred 10% of his allowance to Jane, but now wants it cancelled with effect from the start of the current tax year.

The following might work?

John cancels the Marriage Allowance transfer online (but he still has an £11,310 Personal Allowance until the next tax year, Jane has £13,830 for this year)

Jane requests a Marriage Allowance transfer online to John (John and Jane now each have roughly £12,570 Personal Allowances again for this year)

Jane immediately cancels the Marriage Allowance transfer online (both John and Jane get £12,570 in future tax years)

helenk1234

I fell foul of this as well. I know that this current tax year I will be a higher rate tax payer. Also my husband gets his pension so has no spare allowance to give me. I waited until 7 April this year to cancel it (well he had to cancel it via his tax account). I was shocked that it said this would not apply until next tax year and his tax code for this current year still showed it was deducted from his tax code meaning he was paying more tax than he should. It wasn't added to my tax code as I was going to be a higher rate tax payer so as a household we were paying too much tax. I contacted HMRC and eventually the marriage allowance transfer was cancelled for this tax year.