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Self Assessment - Not sure why it is saying my Dad owes Tax

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Question of tax returns.


I have been doing self assessment forms for my parents for the 1st time, they have very simple incomes, state pension, private pension and interest from savings and a tiny amount of shares in non isa holdings.


They are both well within the 20% income tax band.


The reason for the self assessment form is a one off chargeable event as they cashed in a life insurance policy which they held 50 50 and profits are treated as tax paid.


I completed Mums tax return and that said 0 tax owed. When I did dads it says he owes £231 in tax, I think this is because mum only had an income of around 10K and they benefited from the transfer of a portion of her tax band to dad under the marriage tax allowance.


This is the only thing I can think this £231 can be, Dad pension is a final salary scheme paid by his ex company and, savings interest was £91, all his other money is in ISA. He did go £10 over the £1K dividends allowance, but he says the tax has been paid on that.


Therefore presuming it is the difference on the married tax allowance, does this get taken off somewhere in the background and corrected after submission, there is no place I can see on the online form to reference it, not would I know how to calculate if the £231 is for that, but it is the only obvious thing as their finance is so simple.


Comments

  • eskbanker
    eskbanker Posts: 37,259 Forumite
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    Are you able and willing to share a copy/paste of all the key figures (income streams and allowances, etc) comprising the calculation, i.e. the workings shown in the final stage of the process?
  • sheramber
    sheramber Posts: 22,576 Forumite
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    The marriage tax allowance is a tax credit which is deducted from the receiving partner’s tax liability. 

    I don’t think it is shown on the tax return calculation but is deducted  when the amount of tax due is  shown on the statement of account.
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,626 Forumite
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    edited 8 September 2024 at 11:02PM
    sheramber said:
    The marriage tax allowance is a tax credit which is deducted from the receiving partner’s tax liability. 

    I don’t think it is shown on the tax return calculation but is deducted  when the amount of tax due is  shown on the statement of account.

    I think it's slightly different to that, although the same end result.

    As the recipient cannot "claim" Marriage Allowance" there is nowhere on the tax return for them to include it.

    Once the completed return is submitted HMRC's systems undertake an automated check and if an existing Marriage Allowance application is in place for the tax year they return relates to then the tax credit will be included and a revised calculation issued (or be viewable online).

    The revised liability then feeds into the Self Assessment statement of account.
  • eskbanker said:
    Are you able and willing to share a copy/paste of all the key figures (income streams and allowances, etc) comprising the calculation, i.e. the workings shown in the final stage of the process?
    I dont have the figs to hand as I dont live with my parents and was there at the weekend. His p60 from his final salary showed the tax he paid on that. So presumme the correct anount of tax was paid his pension is about £23K and then he gets the state pension around 9K. 

    The only other non isa income was £91 pounds interest on savings and then Dividends a shade over £1K by about twenty pounds. 

    He cashed in a joint life insurance policy with a gain of about £17K, but this was treated as tax paid. 

    Thus I don't indersatnd the form says he owes £231 in tax, I can only assume that this is in relation to the marriage tax thing and transfering some of the unused from my mum, her total income for the year was around £11K. 

    Can I ignore the £231? and assume it is the married tax allowance and it will somehow feed in? I don;t want to get him to pay the £231 on his debit card, likewise I don't want to ignore it and get him a fine. He is not very good these days at the age of 78 and we are currently enacting a POA. 

    Or will the £231 be adjusted on his tax code if he does owe it and taken off his private pension 
  • eskbanker
    eskbanker Posts: 37,259 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    There's certainly no need to make any payment at this stage - as part of the SA process you have to specify whether collection of any underpayment will be via PAYE coding adjustment (which would apply in 2025/26), but if wanting to pay it as a one-off then that doesn't need to be done until January 2025.

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