Marriage allowance - fiscal drag

Mikeyorks

I've been in receipt of the 10% allowance from my wife ever since inception in 2015. So it's become part of the tax background - and I'd completely forgotten it only remains relevant to basic rate payers! My fault entirely.

But - owing to the freezing of the personal allowance and a particularly good year for pension increases between 23/24 and 24/25 (up £4k) I hit the 40% rate a bit unexpectedly. 

Net result is an underpayment close to £1k (inc 25/26 to date) and the knowledge that many more will be reined in owing - mainly - to the less than pleasant effects of fiscal drag! Be cautious.

Dazed_and_C0nfused

Mikeyorks said:

I've been in receipt of the 10% allowance from my wife ever since inception in 2015. So it's become part of the tax background - and I'd completely forgotten it only remains relevant to basic rate payers! My fault entirely.

But - owing to the freezing of the personal allowance and a particularly good year for pension increases between 23/24 and 24/25 (up £4k) I hit the 40% rate a bit unexpectedly. 

Net result is an underpayment close to £1k (inc 25/26 to date) and the knowledge that many more will be reined in owing - mainly - to the less than pleasant effects of fiscal drag! Be cautious.

And if the majority of your income is from pensions and the +2p/-2p idea comes to fruition that will likely be just the start of an inevitable increase in the tax you will be paying!

singhini

Mikeyorks said:

I've been in receipt of the 10% allowance from my wife ever since inception in 2015. So it's become part of the tax background - and I'd completely forgotten it only remains relevant to basic rate payers! My fault entirely.

But - owing to the freezing of the personal allowance and a particularly good year for pension increases between 23/24 and 24/25 (up £4k) I hit the 40% rate a bit unexpectedly. 

Net result is an underpayment close to £1k (inc 25/26 to date) and the knowledge that many more will be reined in owing - mainly - to the less than pleasant effects of fiscal drag! Be cautious.

With the personal allowance basically unchanged for the last seven years, it seems the government is making it harder for earnings to keep pace with inflation. My understanding is the £12,570 freeze is in place for another 2 years (making that essentially a 9 year freeze) 🤦‍♂️ 

SVaz

I’ll be quite surprised if they don’t extend the freeze in the upcoming budget. 

I had to pay back 2 years of married allowance 5 years ago, it’s so easy to forget about it