Marriage Allowance

davidbird wrote: »

"This year (2018-19) the amount of tax allowance transferred has (on my tax code) been reduced from £1190 to £1134, giving me a personal allowance of 11850+40+1134=13024 rather than 11850+40+1190=13080."

Apologies, what I should have said was in March I received a Tax Code Notification for what my Tax Code in 2018-19 was going to be. This was the 11850+40+1190=13080. In June I received a revised notification, this was for the 11850+40+1134=13024. It was this change that had me confused...


"This is because HMRC think you aren't a basic rate payer but are an INtermediate rate payer. Marriage Allowance entitled you, as the recipient, to a tax deduction of £238. It does not entitle you to a higher Personal Allowance. HMRC deal with this by giving you an extra "allowance" in your tax code. As a 21% payer allowing £1190 would save you £249.90 (1190 x 21%) when you are only entitled to £238 (in the current tax year).

£1134 extra allowance at 21% = £238.14

The main question here is are you an intermediate rate payer? If you aren't I'n not sure why you would have additional personal pension relief in your tax code either."

Thanks "Dazed&Confused", actually that does (almost) make sense - apart from as the £40 pension tax relief was in the initial notification, so why not the reduced allowance?


As I'm a Scottish tax payer, I am definitely into the 21% band. It seems like the nice lady at HMRC didn't really understand it either...


So, as my income varies month to month depending on actual hours worked, the amount of income I have in the 21% band changes as well. Would the amount of tax allowance transferred vary as well?

The allowance will not vary. The code is calculated based on an estimate of annual income, not week to week. If it's over £24,000 then this is the correct allowance.

As long as your income for the year is going to be more than £24,000 but less than the 40% tax threshold of £43,430 then the allowance given is correct.

The adjustment from £1190 to £1134 takes account of the additional 1% tax on the intermediate rate. If they didn't adjust for this then because of the way the tax code works you would get too much relief by giving the standard £1190 allowance.

If your income slips below £24,000 at the end of the tax year, or you are straddling both the 20% and 21% bands, (your income is over %24,000 by less than £1190) then HMRC will calculate any adjustment to you when they review your details after 5 April 2019.

When the calculation is produced the Marriage Allowance is given as an actual deduction of tax, not as additional allowances. This ensures that the maximum anyone ever gets for 2018/2019 is £238.

It is astonishing how, after years now, HMRC have:

a) so many different ideas as to how MAT works, and,

b) nobody who seems to understand either the MAT legislation or HMRC's perverse implementation thereof.

Re:
"It's worth noting you can also only apply for those years in which you both met the criteria. So if you earned more than the £11,000 personal allowance in 2016/17, HMRC won't allow you to claim it."
I applied for past years and my partner received a letter explaining he was due a refund for the 2016/2017 tax year. He received a refund for an amount different from the amount in the letter. After waiting a week or two without hearing any more he called up and found that the refund he had been notified of had been included in the payment he had received. The difference was a refund of a small, separate overpayment, with no written explanation. He was advised the 2015/2016 refund application "hadn't taken", so would be reprocessed. A couple of weeks later he received another refund. Within days I received a cheque for £78, followed by an eight page letter explaining 1) I was due a refund of £78 for 2015/2016 tax year as I had overpaid tax, and 2) I had UNDERPAID tax for 2015/2016 by £278!! The figures in the accompanying 'calculation' made no sense.
I advise anyone applying;
1) Check it's worthwhile before applying. The advice about your application not being accepted if you earned over the threshold isn't necessarily true.
2) Check your figures carefully against any information received from HMRC and make sure it all makes sense, and
3) Hold on to ALL your paperwork in case you need it in future.

What etienneg says.

She cannot transfer the "excess", it's all or nothing.

It has nothing to do with any "system" it's how the government/legislators wrote the tax law which introduced Marriage Allowance.

In fact someone earning £40k can successfully apply for Marriage Allowance and would end up with a bill virtually identical to the refund their spouse would be entitled to. In that situation there is absolutely no benefit in applying but they would be eligible to do so.

I presume you will be sending £120 your wifes way