Marriage Allowance Tax

bazjaq

I have been receiving the marriage allowance from my wife for a 3 years. She has just got a letter from the taxman claiming that she owes £60.80 for the year 24/25. Her pension income was £11614.20, she has no other earnings. So she gives me £1260 of her allowance which I pay 20% tax on (£252 = £50.40) So what is the point of it? Martin never mentioned this as far as I know.  

Dazed_and_C0nfused

bazjaq said:

I have been receiving the marriage allowance from my wife for a 3 years. She has just got a letter from the taxman claiming that she owes £60.80 for the year 24/25. Her pension income was £11614.20, she has no other earnings. So she gives me £1260 of her allowance which I pay 20% tax on (£252 = £50.40) So what is the point of it? Martin never mentioned this as far as I know.  

If you have sufficient income Marriage Allowance saves you £252, not £50.40.

So overall, as a couple you are likely to be ~£191 better off as a couple than you would be without Marriage Allowance.

But she can always cancel it (for future tax years) if she really doesn't want to have the reduced Personal Allowance.

sheramber

The personal allowance is 12570

Take away the transfer of 1260 

Your wife  now has a personal allowance of  11369

Her pension is  £ 11614 .20 

11614 - 11369 =245 liable to tax & 20%

Yiu receive a credit if £252 from the transfer if allowances do your liability is reduced by £252.

As a couple you are better if  £252 - £60.80

Why do you think you pay tax on the credit of £252 transfer to you?

bazjaq

Thankyou both for your quick replies. I'll bow to your knowledge and she'll pay her bill but I'm still wondering if she doesn't earn £12570+ why does she have a tax bill!

kimwp

bazjaq said:

Thankyou both for your quick replies. I'll bow to your knowledge and she'll pay her bill but I'm still wondering if she doesn't earn £12570+ why does she have a tax bill!

Because you are using some of her allowance, which reduces the income level at which she starts to pay 20% tax.

Dazed_and_C0nfused

bazjaq said:

Thankyou both for your quick replies. I'll bow to your knowledge and she'll pay her bill but I'm still wondering if she doesn't earn £12570+ why does she have a tax bill!

Because she has given part of it away to you, her Personal Allowance is only £11,310 now.

Eventually there will be a point where she is paying £252 she doesn't need to.  But by avoiding that tax bill you will be the one paying £252 more.

It's swings and roundabouts really.

gwynlas

There are other threads on the forum where many pensioners are dragged into paying tax as personal allowance remains frozen whilst pensions increase.

sheramber

bazjaq said:

Thankyou both for your quick replies. I'll bow to your knowledge and she'll pay her bill but I'm still wondering if she doesn't earn £12570+ why does she have a tax bill!

marrisge transfer allowance is not an extra allowance that you get.

IT is deducted from your wife's personal allowances of 12570. so she only has £11310 left.

LITRG

Hi
We have information about the marriage allowance, which is a transferable tax allowance, on our website which you may find useful:  Marriage allowance (transferable tax allowance) | Low Incomes Tax Reform Group. It explains how the transfer works, how to claim it and how to withdraw a claim too.

hostertlady

sheramber said:

The personal allowance is 12570

Take away the transfer of 1260 

Your wife  now has a personal allowance of  11369

Her pension is  £ 11614 .20 

11614 - 11369 =245 liable to tax & 20%

Yiu receive a credit if £252 from the transfer if allowances do your liability is reduced by £252.

As a couple you are better if  £252 - £60.80

Why do you think you pay tax on the credit of £252 transfer to you?

thanks for this, i was just noseying about the forum and this is a very helpful comment...