Marriage Tax Allowance Eligibility Change?

20vt-rs

I’m married and have taken my wife’s portion of tax allowance for this for the past 4-5 years. When it was set up, my wife earned under the 20% threshold, and I am a 20% tax bracket earner.

However this year things have changed, due to fiscal drag my wife is now approx £2k over the threshold and now pays 20% tax. Additionally, I’ve just been made redundant and the pay-off has tipped me into the 40% bracket for this tax year.

Do I need to do anything to give this allowance back to my wife, as we are no longer eligible. Or will the tax office pick up on this and adjust things accordingly?

My understanding on eligibility is that one should be non tax paying, and the other 20% bracket.

Input appreciated, thanks!

TadleyBaggie

Not heard that HMRC automatically cancel it, best you do it yourself before the end of the tax year.

eskbanker

She should contact them to reclaim it, and, depending on your job prospects, it might be worth you transferring yours to her.

https://www.gov.uk/marriage-allowance/if-your-circumstances-change

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6654921/marriage-tax-allowance-eligibility-change

They will automatically cancel it once you are identified as an actual higher rate taxpayer.

This only happens after the end of the tax year though so you could end up owing tax for the current tax year (often ~£500 in relation to Marriage Allowance) whilst your wife gets a refund once she receives her full Personal Allowance back (typically ~£250 in relation to Marriage Allowance).

20vt-rs

Thanks all, interesting feedback and good for thought. I might give them a call to talk through, as I want to make sure it’s right. It sounds like even going into 40% later in the tax year, might wipe the benefit of having this for the whole tax year, not just at the point of going into the next band.

sheramber

https://forums.moneysavingexpert.com/discussion/comment/81881412#Comment_81881412

yes, eligibility is based on your annual income and the allowance applies for the year or not at all.
it is not apportioned.

20vt-rs

https://forums.moneysavingexpert.com/discussion/comment/81880609#Comment_81880609

Thanks for the info and to @sheramber for clarifying the last question…

It probably makes no difference now or later then if we revert it back to my wife having her allowance, the system will work it all out after the end of tax year regardless. I think unfortunately it looks like I may be in for an element of underpaid tax coming my way 🙁

MyarsisDragon

I'm riding on the back of this thread because I have a similar query. My husband's been getting the married tax allowance from me for a number of years because I've worked part time and have never reached the tax threshold.However, I started receiving my state pension in December, which, along with around £4k from a workplace pension takes my income to around the £16k-£17k mark. His income is still higher than mine as his workplace pension (which he already pays some tax on) is more than mine. I'm assuming this means that I now have to take back that tax allowance from him and that I need to do this pro-actively? I would have thought HMRC would do this automatically, but it seems not, from previous replies. Also, HMRC contacted me yesterday setting out my 26/27 estimated allowance. They mentioned MTA but said nothing about changing it back. Am I correct?

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81888609#Comment_81888609

You don't need to change it, and neither do HMRC, but you can choose to do so - if you leave it as is then the two of you still ultimately pay the same amount of tax collectively, so it serves no purpose, but it's only if one becomes a higher rate payer that it's no longer an option.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81888609#Comment_81888609

From what you have posted you are both still eligible. Whilst both alive and married it's only if one of you becomes a higher rate taxpayer that you would become ineligible.

But given your income now you may prefer to cancel it now (before 6 April 2026) and have the standard Personal Allowance again.

MyarsisDragon

https://forums.moneysavingexpert.com/discussion/comment/81888802#Comment_81888802

Thank you. I've already mentioned to him changing it back. Makes sense to change it back for me, a) because I've already told him it's a possibility (and it's all too easy to confuse him, money wise), and b) it'll only make a difference of -£21 a month to him, which he can afford more than I can - I'm more likely to save it!