HMRC over allocated marriage allowance resulting in underpaid tac

Dazed_and_C0nfused

It includes the £518.80 from the 2023-24 tax year.

Have you read my post and checked the breakdown of your current tax code?

Baffledbyitall

Hi Dazed_and_C0nfused,
Yes just read your post thanks, I am not too concerned about my wife reapplying for marriage allowance transfer as being a couple it won't make that much difference.
From what I've shared do you think that my tax payments should normalise in the coming years?

Dazed_and_C0nfused

Baffledbyitall said:

Hi Dazed_and_C0nfused,
Yes just read your post thanks, I am not too concerned about my wife reapplying for marriage allowance transfer as being a couple it won't make that much difference.
From what I've shared do you think that my tax payments should normalise in the coming years?

Until you check the breakdown of your tax code no one can really help you on that last point 

I think it is highly likely that Marriage Allowance was removed during 2024-25 and has not been in your 2025-26 tax code but only you can check that.

Re your wife not applying, do you mean she can actually use the extra Personal Allowance she will now get for 2024-25 onwards?

Baffledbyitall

Hi Dazed_and_C0nfused,
 Quote from my earlier post see below

"Not sure if the Marriage Allowance has been removed, I have two private pensions the larger one has a tax code of CK312 and the other has the basic rate of tax code CBR and I don't pay tax on my state pension." (yet)

So, as I understand what you were saying, the tax code one of my pensions in indeed CK312 recovering the underpaid tax.

If as say, you think that the marriage allowance was stopped because I strayed into the higher tax bracket in 2023-2024, then when they have recovered the unpaid tax in 2024-2025 then I shouldn't see any issues at the end of the next tax year, so I don't need to take any further action?

Nomunnofun1

Let’s look at 2024/25 in a slightly different way. 

Job: income was 16554 and 12051 was taxed at 20% - £2410.20. £4503 wasn’t taxed.

Pension 1 - Income was £2904 and £1677 was taxed at 20% - £335.40. £1227 wasn’t taxed. 

Pension 2 - Income was £9992 and all was taxed at 20% - £1998.40. 

State pension was £8501 - none was taxed. 

Add up all the amounts not taxed - £4503 + £1227 + £8501 =£14231. 

But your personal allowance is £12570. £1661 of your income should have been taxed but wasn’t. 

20% of £1661 is £332.20. That’s the underpayment for 2024/25. 

Add it to the £518 for 2023/24 and you get £851.

Many years ago one had to reconcile underpayments at the Inland Revenue as it was then. Not sure it’s done any more. 

It should all be fine going forward. It would appear marriage allowance wasn’t received that year - just incorrect allowances granted at more than one source of income. 

Baffledbyitall

 Thanks Nomunnofun1
Hoping they've cancelled the marriage allowance so that it doesn't happen again next year
So pension scheme 1 now has a tax code to recover unpaid tax, which makes sense.

Nomunnofun1

Baffledbyitall said:

 Thanks Nomunnofun1
Hoping they've cancelled the marriage allowance so that it doesn't happen again next year
So pension scheme 1 now has a tax code to recover unpaid tax, which makes sense.

If it was cancelled in 2024/25 it can only be restarted by a claim from your wife. 

Baffledbyitall

Brilliant, thanks

sheramber

Nomunnofun1 said:

Many years ago one had to reconcile underpayments at the Inland Revenue as it was then. Not sure it’s done any more. 

I remember these days of manual assessiments and I still do it  at times when  checking my finances.