NSP, Marriage Allowance & Tax.

Techno_Novice

Like many, my wife’s only income is her NSP.  As a non taxpayer, she has transferred 10%, 1260, of her Annual Personal Tax Allowance (PTA), 12570, to me (Marriage Allowance (MA)).  This has reduced her PTA to 11310 and means I pay around £260.00 a year less in tax on my income.

With the 4.1% rise for 2025/2026 in the NSP, this raises her NSP in excess of her PTA.  Consequently she will be liable to pay around £125.00 in tax.

Whilst she could take back the 10% MA, it still makes sense for me to retain it.  By doing so, on our combined income, we will still benefit by just over £120.00 in less tax.

Our question is - Others will be in the same position, so how and when will they have to pay the income tax due and will they now get a Tax Code Notice from HMRC?  Thank you.

Dazed_and_C0nfused

Unless she has some PAYE income (earnings or pension) she won't have a tax code.

HMRC will send her a Simple Assesment calculation in the summer after the end of the year she owes money for.

The tax due will need to be paid direct to HMRC by 31 January after the end of the tax year (assuming the calculation is issued at least 3 months prior to 31 January).

Techno_Novice

Many thanks Dazed_and_Confused.

neveraround

my wife dose the same , no other income ---  10% transfered to me  making her allowance £11310 and her NSP for 24/25 is £11501 taxable,   With the increase in NSP for 25/26 it will be £11,970 taxable .    the question is if the allowance of £12570 isnt increased and her NSP now exceds this amount will we have to cancel the Marriage Allowance ? 

Dazed_and_C0nfused

neveraround said:

my wife dose the same , no other income ---  10% transfered to me  making her allowance £11310 and her NSP for 24/25 is £11501 taxable,   With the increase in NSP for 25/26 it will be £11,970 taxable .    the question is if the allowance of £12570 isnt increased and her NSP now exceds this amount will we have to cancel the Marriage Allowance ? 

No, eligibility for Marriage Allowance only ends if one of you becomes a higher rate payer.

She might not want to pay the £120 though, so you could keep her sweet by paying this out of your £252 savings 😉

BigDaddy856

My wife and I applied for the Marriage Tax Allowance on the phone two days ago. It took about 20 minutes including the time spent on hold, lol.

I had emails this morning covering the last three years, I opened up the HMRC site to find we had refunds totaling £799.19 Happy Christmas or what. 

If it wasn’t for you pushing it on the show we wouldn’t have bothered. So here is a big thankyou from us and Happy Christmas to all of the team

All the best 

Angy & Jeff 

xrg4

My wife currently has an NHS pension on a PAYE basis but with an income below the Tax threshold.

Consequently, I am using the £1260 allowance she has transferred to me.

However, in August, she will begin receiving the NSP at close to the full amount, meaning she will begin paying tax on her NHS pension.

NHS know her tax code / status because of above and presumably HMRC will inform the NHS pension scheme when she gets the State Pension, so am I right in thinking her tax affairs / payment will automatically update (albeit a few months later)?.

What will happen to me in terms of tax with regard to her allowance? Should I tell HMRC or does my wife's tax status change let HMRC know that we are sharing her allowance?

In terms of our new joint income in the Summer, is there a simple mechanism to calculate the point at which it would be better to cancel the Marriage Tax allowance transfer.

Thanks in advance

molerat

HMRC will do nothing about the MA situation, as you are still eligible then it is up to you to change it if you wish.  If you want to change it for next year you need to do it before the end of this tax year.  Worst case is as a couple you will be no worse off as she would pay more tax and you less by the same amount.  You need to work out her total income for the year to see how much tax she will pay.  Remember state pension is taxable when due and not when paid.

How much short of the full pension is she ?

xrg4

Thankyou

She will be eligible from 23rd July, hence my assumption the first payment will be in August.

Her projection is about £8 a week short of the full pension (so about £400 pa) but it will make her approx £5k above her annual tax threshold.

Can I ask what you mean by state pension is taxable when due and not when paid?

Mine is paid without tax and my tax burden is satisfied from other, private pensions, hence my question.

Dazed_and_C0nfused

xrg4 said:

Thankyou

She will be eligible from 23rd July, hence my assumption the first payment will be in August.

Her projection is about £8 a week short of the full pension (so about £400 pa) but it will make her approx £5k above her annual tax threshold.

Can I ask what you mean by state pension is taxable when due and not when paid?

Mine is paid without tax and my tax burden is satisfied from other, private pensions, hence my question.

For State Pension you need to forget what is paid, it's what she is entitled to that counts.

And for HMRC they only seem to consider whole weeks.

So if she is entitled to say £213.00/week from 23 July 2025 that is probably 36 weeks in the 2025-26 tax year.

HMRC will ultimately tax her on the basis her State Pension for 2025-26 is £7,668 (213.00 x 36).

The fact that she might receive a little bit of that money from DWP shortly after 5 April 2026 is completely irrelevant.

xrg4

Apologies I did not make my thoughts clear enough.

She will be approx £5k pa over the standard tax allowance for a full tax year (25/26) at current rates.

Your are right that the tax year 24/25 is going to be very close to the threshold so I guess we don't need to think about MA transfers until this time next year in time for the new tax year... if at all?