Marriage Tax Allowance

carly

I am a married woman in receipt of full SRP. My only other income is interest on savings. I do not currently pay income tax. For the past 4 or 5 years I have transferred the marriage tax allowance to my oap husband who does pay 20% tax on his private pension. After April next year assuming that the tax bands do not change and I become liable for income tax should I reclaim this tax allowance for myself or will it not make any difference?

eskbanker

If you've transferred the allowance, you now have a reduced personal allowance of £11,310, so is that the threshold you'll be passing in April next year ('full' pension can be ambiguous)?

carly

Yes, that's the threshold that I mean. I'll be receiving £12,547 .60 annually plus savings interest approx £2400.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81885916#Comment_81885916

Not sure I'm following - if you're already receiving state pension, while on a reduced personal allowance, surely your pension income must already exceed £11,310 (if you'll be at £12,547.60 next year) and you should be paying tax now?

Rodders53

£12,570 is the personal allowance. If you cancel the transfer, you will not be liable for any tax on those numbers; but still have a small zero % available (unused) of £22 .

As a couple you will still pay less overall income tax if you keep transferring the allowance to hubby. Every little helps. ;)

You will, though, get a tax bill (eventually) to pay for your SP over the £11,310 reduced allowance. For 27-28 may be better to cancel, although you'll still probably have a tax bill every year thereafter as SP will be over the standard personal allowance.

I am about to become a higher rate taxpayer (with SP and DB pension increases in April) and we've cancelled out allowance transfer on the same NSP amount of income to avoid a tax bill for my wife next year (and HMRC cancel it anyway for Higher Rate taxpayers - aiui from reading this forum).

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81885925#Comment_81885925

I wonder if the op simply hasn't received their Simple Assessment calculation for 2024/25 yet?

Before that maybe there was no tax to pay (or a tiny amount HMRC haven't bothered with?).

But there should eventually be something to pay for 2024/25.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81885941#Comment_81885941

There's also the possibility that OP has only reached SPA during 2025/26, although this would still entail tax being payable in 2026/27 rather than first coming into play in 2027/28.

Brie

https://forums.moneysavingexpert.com/discussion/comment/81885939#Comment_81885939

Sorry but this doesn't make sense to me. If both spouses have to pay tax why would it save some money to keep the MTA in place? Obviously it will save him some money but at the cost of her having to pay the same amount, or wouldn't that happen?

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81885953#Comment_81885953

I think the point was that it's only neutral once both are earning over £12,570, so as long as one is still below that then there's a benefit in transferring, however slight that may be.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81885953#Comment_81885953

There are situations where one person might have non savings non dividend income of say £12,000 and their spouse say £30,000.

The lower income person can apply for Marriage Allowance and pay tax on £690. But their spouse saves £252 so still worthwhile doing.

And the Scottish starter rate of 19% also adds even more niche situations for some people!

sheramber

https://forums.moneysavingexpert.com/discussion/comment/81885953#Comment_81885953

I transferred the allowance to my husband.

For example for 2018/19.I paid £80 in tax but he got the full relief of the transfer as a deduction from his tax. Thiat was worth £238 off his tax bill.

As a couple we’re better off than me having excess unused allowances and him getting no reduction.