Marriage Allowance - help, please!

KittyKatt08

Several years ago under the marriage tax allowance scheme, I transferred £1260 of my personal allowance to my husband, as I don't earn enough to pay tax. Looking on the government website, this is actually worth an extra £252 a year.

It's worked perfectly until now, when last week my husband received an unexpected letter from HMRC saying he has underpaid tax by £570 for the 2023/24 tax and they'll be reclaiming this from his salary each month from April 2025. 

My questions:

Hubby is in the PAYE scheme with a large organisation, so how can this have happened?

By way of explanation, the letter from HMRC states that "the actual Marriage Allowance you were given was more than the allowance you were due".
But  marriage allowance is a flat rate, and the maximum amount he could have received over 2023/24 from the marriage allowance £252, so where has this £570 come from?

Looking at his payslips, it doesn't look as though he's receiving it this financial year (2024/25) anyway. No idea why, as I haven't cancelled it, and I certainly haven't received any notification that it's been cancelled! Neither have I received any correspondence asking me whether I wanted to continue with this. I just assumed it would continue until when /if I changed my mind.

We simply can't afford to lose nearly £50 a month from April - the money just isn't there, especially  with bills going up all the time, so how can he persuade them not to take it? Nothing has changed, (he just has the one job, no "side hustles") so he doesn't  have a complicated financial situation. It really isn't his fault this has happened, so I don't see why we should be penalised. (I deal with most of the financial stuff, but I'm aware that due to Data protection etc, he's going to have to be the one to deal with HMRC on this occasion.)

TheSpectator

We're going to need a bit more info, can you post details of the calculation he received. Is it possible he was a higher rate taxpayer in 23/24 and therefore not entitled to the allowance?

If the calculation is correct then he owes the money. It's not a penalty to pay the tax you owe.

KittyKatt08

Thank you for your fast reply 
I've taken  pictures of the relevant pages of the letter (personal details redacted!). Even if he was overpaid for the year, then surely the maximum they should be able to claw back is the £252 he would have been paid in error? 

TheSpectator

KittyKatt08 said:

Thank you for your fast reply 
I've taken  pictures of the relevant pages of the letter (personal details redacted!). Even if he was overpaid for the year, then surely the maximum they should be able to claw back is the £252 he would have been paid in error? 

8

No, to give the benefit of £252 in the tax code then HMRC increase the tax free allowance by £1260 (£1260 @ 20% = £252). But as earnings have made him a higher rate taxpayer he is not entitled to the allowance so needs to pay back £1260 @ 40% = £504. There also seems to be other income of £312 that only 20% tax has been paid on when it should be 40% so another £62.40 underpaid.

The onus was on your husband to advice HMRC he no longer met the conditions to receive marriage allowance.

Dazed_and_C0nfused

If he was a higher rate payer he could easily owe over £500.

That's because HMRC give Marriage Allowance as a tax code allowance so a higher rate payer will get £1,260 x 40% when in reality they are ultimately due £0

sheramber

What was his tax code for 23/24?

KittyKatt08

Thank you for your replies, and especially the worked calculations, which have explained everything very clearly. 

TheSpectator

KittyKatt08 said:

Thank you for your replies, and especially the worked calculations, which have explained everything very clearly. 

If he is no longer higher rate then you can ask for the allowance to be reinstated but unless he has had a drop in income this won't apply.