Marriage allowance, UFPLS and bank interest

ClockBear

Hi,

My wife has transferred some of her personal allowance to mine. My wife earns about £10,000 per year. I have a salary of £40,000 per year and am taking a further £13,333 year from my SIPP pension using UFPLS so 25% tax free and the remaining 75% or £10,000 taxable income.

That brings my income for the year to £50,000.

If I earn a further £500 in bank interest does that take me to a total of £50,500 income which is over £50,270 the 20% tax band, and so I’m not able to claim the marriage allowance?

Many thanks for your help.

Isthisforreal99

Correct....

Put the savings in your wife's sole name?

ClockBear

Thank you for your input. I was hoping that the personal saving allowance would take care of the £500 interest and therefore not count as income!

Moonwolf

You could use ISAs of course but watch out for “surprise” interest as well.

I believe the Nationwide fair share counts as bank interest and not income, just had my £100.

If you bought a car on finance with a discretionary interest rate, even if you haven’t applied, you might get an award with back dated interest.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/82033681#Comment_82033681

All the Personal Savings Allowance is is a 0% tax rate.

You still have £500 of taxable income and if you have used all your Personal Allowance then that interest is almost certainly going to be taxed. Just at 0%.

If you want interest to be ignored for tax purposes the usual option is an ISA.

Don't forget though, ignoring a quirk with dividends you actually have to be liable at higher rates to lose Marriage Allowance.

ClockBear

Thank you. I’ve checked the HMRC website and it does indeed say:

To work out your tax band, add all the interest you’ve received to your other income.

Albermarle

You could add a bit more to your pension.

ClockBear

Thanks, but I think my pension is too big already - I’ve breached the old LTA and pensions are to be included in IHT next year.