Husband is over the 40% threshold - what happens to marriage tax allowance?

tiptoe_mouse

I've just found out that my husband is over the 40% tax threshold for the current tax tear. His P60 shows earnings of £53144.24. 

I applied for the marriage tax allowance many years ago, as I'm a non-taxpayer.

Presumably we are no longer eligible for it? Do I need to notify HMRC, or will they figure it out anyway?

Would paying into my husband's SIPP before the end of the tax year enable us to remain eligible? If so, would we need to let them know that he's done this, and if so, how? Neither of us currently fill in a self-assessment tax return.

Many thanks in advance!

tiptoe

Dazed_and_C0nfused

tiptoe_mouse said:

I've just found out that my husband is over the 40% tax threshold for the current tax tear. His P60 shows earnings of £53144.24. 

I applied for the marriage tax allowance many years ago, as I'm a non-taxpayer.

Presumably we are no longer eligible for it? Do I need to notify HMRC, or will they figure it out anyway?

Would paying into my husband's SIPP before the end of the tax year enable us to remain eligible? If so, would we need to let them know that he's done this, and if so, how? Neither of us currently fill in a self-assessment tax return.

Many thanks in advance!

tiptoe

If you have provided all relevant information then yes, he will lose Marriage Allowance for 2024-25 and later tax years.  Although you can reapply for later years if 2024-25 wont be repeated.

HMRC will check this when reviewing the final position for 2024-25 and he is likely to owe just over £500 (in relation to Marriage Allowance).

Pension contributions could prevent this problem and completely reduce his higher rate liability (it's being liable to higher rate tax, not his taxable income that makes him ineligible for Marriage Allowance).

If he adds £100 to a SIPP then that will have £25 added to his net contribution, making a gross contribution of £125.  And that gross contribution will increase his basic rate band by £125.

Don't forget to factor in all taxable income, not just what is on his P60.  Company benefits, interest, dividends etc. 

Nomunnofun1

tiptoe_mouse said:

I've just found out that my husband is over the 40% tax threshold for the current tax tear. His P60 shows earnings of £53144.24. 

I applied for the marriage tax allowance many years ago, as I'm a non-taxpayer.

Presumably we are no longer eligible for it? Do I need to notify HMRC, or will they figure it out anyway?

Would paying into my husband's SIPP before the end of the tax year enable us to remain eligible? If so, would we need to let them know that he's done this, and if so, how? Neither of us currently fill in a self-assessment tax return.

Many thanks in advance!

tiptoe

You suggest that your husband currently has a SIPP?
What were his contributions in the current tax year?
Either way if they were to total £3000 (£2400 actual payment grossed up to £3000 by HMRC) he could avoid HR tax. 

He has only a few days left to make contributions to reach that figure.