Increasing tax free pension withdrawal using marriage allowance

elsa1611

As above we are looking to transfer our marriage tax allowance over so we can get more out of our pension pot tax free.

My calculation is as follows, tax code goes up to 1383 so £13830 - carers allowance for 2026 £4495.40 = £9334.60 plus 25% tax free pension allowance = £11668.25 we can take out of the pension pot tax free next year.

Not that it should matter to much but do we still get the 5k savers allowance as well as the 1k starters?

Dazed_and_C0nfused

elsa1611 said:

As above we are looking to transfer our marriage tax allowance over so we can get more out of our pension pot tax free.

My calculation is as follows, tax code goes up to 1383 so £13830 - carers allowance for 2026 £4495.40 = £9334.60 plus 25% tax free pension allowance = £11668.25 we can take out of the pension pot tax free next year.

Not that it should matter to much but do we still get the 5k savers allowance as well as the 1k starters?

Nope.

In the circumstances you have outlined you would be liable to basic rate tax on £1,260 of your taxable benefits and pension income.

That leaves £3,740 of the 0% savings starter rate band to use.  And if that is all used you would then have the £1,000 savings nil rate band (also a 0% tax rate).

Once you have established the tax liability you would then deduct £252 from it in respect of the Marriage Allowance (as the recipient).

The above assumes you aren't a Scottish taxpayer and don't generate enough interest to be a higher rate payer.

sheramber

Increasing the allowances in your code number is to allow the correct tax to be deducted in year , under PAYE.

However marriage transfer allowance is a tax credit, not an increased allowance.

You calculate your tax liability without it and then deduct to credit from that total. 

elsa1611

sheramber said:

Increasing the allowances in your code number is to allow the correct tax to be deducted in year , under PAYE.

However marriage transfer allowance is a tax credit, not an increased allowance.

You calculate your tax liability without it and then deduct to credit from that total. 

So is there any point transferring marriage allowance over to get more out of the pension or do I just use tax code 1257L which I work out will be £10093.25 we can withdraw next April without paying any tax taking carers allowance off.