Marriage tax allowance

strawb_shortcake

I currently have the marriage tax allowance applied to my tax band. My current salary is about to go up to £47405 backdated to April 24, I recieve an annual bonus around £1000 not guaranteed but could be more or less. There is a small  chance that my salary may increase to around £48500 again back dated to April. 

I appreciate this isn't an issue this tax year, but conscious that next year may be more relevant. 

I understand the marriage tax allowance cannot change mid year? 

Although a payrise always takes affect from 1st April, we often don't know the outcome until the July/August following the effective date. Same goes for bonus, and we don't get any indication of what that may be until we are well into the new FY. 

My OH is unlikely to get close to even earning £10k pa in the  next year or two. 

I am a Civil Servant and a member of Alpha pension scheme, I currently do not pay any additional money into a separate pension scheme or add ons for CS pensions. Neither do I really want to at this point as I try to balance bills, family costs and trying to do the things I enjoy. I do however pay money into a LISA each month. Besides which, my pension and two full state pensions is currently projected to be far higher than our current monthly income.


I obviously have no idea what future CS pay increases are likely to be, this year looks like 3.5% with a small outside chance this could be increasingly to 5%

Hopefully that's enough background information to advise how I manage the married tax allowance and when I should really think about cancelling it?

Thank you 

eskbanker

strawb_shortcake said:

My OH is unlikely to get close to even earning £10k pa in the  next year or two. 

Surely this means that even if you ultimately don't benefit from the extra tax relief, your OH wouldn't be losing out if earning less than £11,310, so there's no downside to leaving it in situ until or unless that changes?

strawb_shortcake

eskbanker said:

strawb_shortcake said:

My OH is unlikely to get close to even earning £10k pa in the  next year or two. 

Surely this means that even if you ultimately don't benefit from the extra tax relief, your OH wouldn't be losing out if earning less than £11,310, so there's no downside to leaving it in situ until or unless that changes?

Well I guess that should have been another question? I thought if I move into a higher tax band I'm no longer eligible for the marriage tax allowance, which really prompted my question

Dazed_and_C0nfused

Have you actually looked at your taxable income?

As Alpha is a net pay scheme your salary is irrelevant for tax purposes.  A salary of £50k might only be taxable pay of £45k.

If you do end up being liable to higher rate tax HMRC will automatically cancel Marriage Allowance and ask you to pay back any underpaid tax.  They check this after the tax year ends.

strawb_shortcake

Dazed_and_C0nfused said:

Have you actually looked at your taxable income?

As Alpha is a net pay scheme your salary is irrelevant for tax purposes.  A salary of £50k might only be taxable pay of £45k.

If you do end up being liable to higher rate tax HMRC will automatically cancel Marriage Allowance and ask you to pay back any underpaid tax.  They check this after the tax year ends.

I had been looking at it crudely and base salary, however last year my base salary was £45802, but my taxable pay was £46,380 due to the £1500 COL payment and a £1500 bonus. 
Bonuses were reduced this year with the intention of putting more into our base pay.

I feel more confused now

sheramber

If you do not want to be in a position where you have an underpayment of tax due to having the transfer and then losing it, you can cancel now , which will take effect in April next year.

You can claim the allowance back for four years so if at the end of the year you calculate you could benefit from it then your husband can transfer it to you. 

You would receive a refund of any tax overpaid.

Or , leave things as they are, and any overpayment will be advised by HMRC after the end of the tax year.

ICE1953

My wife has no income and I am reired with a good company pension and state pension. I claim the marriage tax allowance from her. Next March my wife reaches 66 and will get a full state pension. Will HMRC take the allowance off me or do I need to tell them that I no longer want it?

Dazed_and_C0nfused

ICE1953 said:

My wife has no income and I am reired with a good company pension and state pension. I claim the marriage tax allowance from her. Next March my wife reaches 66 and will get a full state pension. Will HMRC take the allowance off me or do I need to tell them that I no longer want it?

You cannot "claim" Marriage Allowance.

How much will your wife's State Pension be each week (the current tax year amount)?

molerat

ICE1953 said:

My wife has no income and I am reired with a good company pension and state pension. I claim the marriage tax allowance from her. Next March my wife reaches 66 and will get a full state pension. Will HMRC take the allowance off me or do I need to tell them that I no longer want it?

No they won't automatically cancel the transfer.  If you want it to stop for next year she will have to cancel it before the start of the year as you can only cancel from the beginning of the next tax year.  If her only income will be the full new pension of £11964 then you are still better off as a couple keeping the transfer as she would be liable to £131 tax against you losing the £252.