Marriage tax allowance

psp86

Hello

I have a question regarding Marriage, tax allowance for my elderly parents. My mother has given her allowance to my father, they are both state pensioners and both retired.

I mother has gotten a simple tax assessment from HRMC which she owes tax back to them for £130.91. Due to giving her allowance to my father.

My father makes roughly savings of over £6000 of interest a year. I know there’s a saving allowance he gets roughly over £5000. 

What would be the best option getting my mother to cancel the marriage tax allowance so she doesn’t need to pay the tax? I also was under the impression that any state pension money wasn’t taxed?

My father state pension is slightly higher then my mother (£10.30 per week extra) what impact would he have if the marriage tax allowance was removed interms of being taxed? 

Is it worth keeping the marriage tax allowance and letting my mother pay tax on her side instead of my father?

DRS1

I am not sure anyone will know the answer without knowing the taxable income of your parents individually. The marriage tax allowance is said to be worth up to £252 to the recipient so it could still be worth doing it.

eskbanker

State pension is taxable income, although tax isn't deducted at source via PAYE if that's what you mean?

The marriage allowance can be cancelled but doing so only takes effect from the start of the following tax year, so wouldn't impact any tax liability arising from 2025/26, or 2026/27.

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

Whether it's sensible to cancel depends on their overall income situation, so would need more detailed figures…

SacredStephan

I also was under the impression that any state pension money wasn’t taxed?

It's always been taxable, but if your only income is from state pension and is less than your personal allowance there won't be any tax due.

psp86

thank you guys for your replies, my father tax letter will be coming soon. I will share more details with you guys then!

sheramber

Your mother has to pay £130.91 but your father paid £252 less, so a win overall.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82132529#Comment_82132529

We don't know at this stage if the father had enough of a tax liability to benefit from the full £252 relief?

€urofile

If either or both your parents have taxable income of less than £12570 then the zero rate band of £5000 might be a factor.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82138770#Comment_82138770

Assuming you're referring to the starting rate for savings, then this can only come into play for those with taxable income of more than £12,570 - savings interest (except from ISAs) is taxable income…