Removal of Tax Allowance After End Of Tax Year?

GunJack

New one on me.... Had a notification from HMRC for year 24/25, which has recalculated that I owe them £260 in income tax, but their calculation shows this with the marriage allowance removed. My tax code for the year (only PAYE income) and on my P60 shows personal allowance as including the marriage allowance.

The calculation shows that I was £100 into 40pct tax band, but only AFTER removing the marriage allowance. With the marriage allowance included I didn't go into 40pct territory. Can they do this retrospectively? 

sheramber

GunJack said:

New one on me.... Had a notification from HMRC for year 24/25, which has recalculated that I owe them £260 in income tax, but their calculation shows this with the marriage allowance removed. My tax code for the year (only PAYE income) and on my P60 shows personal allowance as including the marriage allowance.

The calculation shows that I was £100 into 40pct tax band, but only AFTER removing the marriage allowance. With the marriage allowance included I didn't go into 40pct territory. Can they do this retrospectively? 

You can only benefit from marriage allowance transfer if you are not liable to higher rate.

That is your liable rate before the transfer. 

Yes, like any allowance , if it is found that you were not due it then it is withdrawn. 

GunJack

sheramber said:

GunJack said:

New one on me.... Had a notification from HMRC for year 24/25, which has recalculated that I owe them £260 in income tax, but their calculation shows this with the marriage allowance removed. My tax code for the year (only PAYE income) and on my P60 shows personal allowance as including the marriage allowance.

The calculation shows that I was £100 into 40pct tax band, but only AFTER removing the marriage allowance. With the marriage allowance included I didn't go into 40pct territory. Can they do this retrospectively? 

You can only benefit from marriage allowance transfer if you are not liable to higher rate.

That is your liable rate before the transfer. 

Yes, like any allowance , if it is found that you were not due it then it is withdrawn. 

In that case, !!!!!!, they got me!! 

Next thing to work on then, is: they want the £260 now, or they'll alter my tax code for 26/27, BUT they've already altered my tax code for this year (25-26) as they've taken off marriage allowance and then reduced the standard 1257 as they think I'll underpay this year, however I've upped pension contributions this year so should finish this year well within 20% band so should be eligible for marriage allowance in 26-27 going on the above info. 

So, do I take the hit and give them £260 this year, and go back to standard personal allowance plus marriage allowance for 26-27, or can I take the lower code for 26-27 but still get the marriage allowance added to that?

My concern is that if I don't pay the £260 now, it'll take about 3 tax years to sort it out by fiddling with tax codes.....

DRS1

Can you contribute an amount to charity now using gift aid and then carry it back into 24/5 to get you below the higher rate threshold?  Probably need to do it via the 25/6 tax return so could get messy but I am sure someone said you can't do this by amending your 24/5 tax return.  I don't know how you claim it if you don't do a self assessment return.

GunJack

Nah, I'm already a charity case 🤣🤣 
Seriously though, the amount isn't an issue, I just want to get back to the status quo in as few tax years as possible...like I said, pension contributions are upped by 6% this year already and depending on when this year's pay round is concluded maybe even more to go.

Dazed_and_C0nfused

GunJack said:

sheramber said:

GunJack said:

New one on me.... Had a notification from HMRC for year 24/25, which has recalculated that I owe them £260 in income tax, but their calculation shows this with the marriage allowance removed. My tax code for the year (only PAYE income) and on my P60 shows personal allowance as including the marriage allowance.

The calculation shows that I was £100 into 40pct tax band, but only AFTER removing the marriage allowance. With the marriage allowance included I didn't go into 40pct territory. Can they do this retrospectively? 

You can only benefit from marriage allowance transfer if you are not liable to higher rate.

That is your liable rate before the transfer. 

Yes, like any allowance , if it is found that you were not due it then it is withdrawn. 

In that case, !!!!!!, they got me!! 

Next thing to work on then, is: they want the £260 now, or they'll alter my tax code for 26/27, BUT they've already altered my tax code for this year (25-26) as they've taken off marriage allowance and then reduced the standard 1257 as they think I'll underpay this year, however I've upped pension contributions this year so should finish this year well within 20% band so should be eligible for marriage allowance in 26-27 going on the above info. 

So, do I take the hit and give them £260 this year, and go back to standard personal allowance plus marriage allowance for 26-27, or can I take the lower code for 26-27 but still get the marriage allowance added to that?

My concern is that if I don't pay the £260 now, it'll take about 3 tax years to sort it out by fiddling with tax codes.....

I think you must have misunderstood something somewhere.

The earliest the tax would have to be paid is 31 January 2026.  And you would have had to have received a Simple Assessment notice for that to be relevant.  Which from what you've posted isn't the case.

You can voluntarily pay it now if you wish, to avoid it being collected via a deduction in your 2026/27 tax code but that would be your choice.  But it does keep things simpler.

There is absolutely nothing you can do now to get Marriage Allowance reinstated for any tax year after 2024/25.  Your spouse would need to make a new application for you to start receiving it again.

Owing tax for 2024/25 wouldn't stop you from being eligible (with a new application from your spouse) for any later tax year.  It might just mean a more complicated tax code if you decide not to voluntarily pay the tax owed for 2024/25.

No reason it should take three tax years from now, it would just be two, with just one being impacted by the tax underpaid.  But paying it direct avoids complications with your tax code.

GunJack

Is there any wonder that people call for UK tax system to be simplified?!?!? 🤣🤣🤣🤣