Marriage Allowance

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  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    Please can you expand on this?

    We've never claimed as my wife earns £12024 a year.
    However she has deductions from her pay pre-tax, which bring her taxable earnings down to around £11,400, hence she doesn't pay income tax at all.

    Albeit for a smaller benefit than most, are we eligible to apply?

    There is no income limit applicable to Marriage Allowance, it's about which tax rates you pay. If she isn't a higher rate payer then she could apply but the benefit for you as a couple does depend on both your incomes.

    I presume the "deductions" you refer to are pension contributions so if her P60 pay figure for last year is £11,400 then you would benefit as a couple providing you pay enough tax. If not pension then what are the deductions?

    Your wife would get a tax bill of £210 and you would get a refund of about £228 assuming you had otherwise paid the correct tax and weren't a higher rate payer yourself.

    If the £11,400 is for the current tax year then she would have £148 to pay (through her wages) and you would get a tax reduction of £238.
  • Consumerist
    Consumerist Posts: 6,310 Forumite
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    Dazed_and_confused wrote: »
    If the £11,400 is for the current tax year then she would have £148 to pay (through her wages) and you would get a tax reduction of £238.
    You just pipped me to the post. (No pun intended).

    But, I agree with your figures. :)
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
  • jimmo
    jimmo Posts: 2,281 Forumite
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    shilts wrote: »
    Unfortunately my mother in law passed away at the end of March . Having spoken to my father in law it turns out that she was only receiving about £80 a week pension . As my father in law was paying tax on his pensions it occurred to me that it might be possible for him to transfer some of her unused tax allowance for past years . Can anyone please tell me whether this is possible for him to do ? Also , if it is possible can it be done for past years without obviously claiming for this current tax year , many thanks ?

    He needs to phone HMRC. See "If your partner has died since 5 April 2015" here.
    https://www.gov.uk/marriage-allowance
  • thermalboyz
    thermalboyz Posts: 27 Forumite
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    polymaff wrote: »
    No, they'll increase his basic-rate-band.
    Thanks, care to explain further
  • polymaff
    polymaff Posts: 3,904 Forumite
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    polymaff wrote: »
    No, they'll increase his basic-rate-band.
    thermalboyz wrote: »
    Thanks, care to explain further

    For MAT eligibility reasons you are trying to avoid being classified as a higher rate taxpayer. That happens when your taxable income exceeds your personal allowances plus your BRB (basic-rate-band). HMRC process pension contributions out of higher rate income by extending the BRB so the contributions fall within the BRB.

    So no reduction in your taxable income but an increase off the threshold at which you become a higher rate taxpayer.
  • polymaff
    polymaff Posts: 3,904 Forumite
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    polymaff wrote: »
    Another update to MSE's Marriage Allowance article and the statement "One of you needs to be a non-taxpayer", is still there.

    When will this zombie untruth be laid to rest?

    How about it, MSE Sam?
    Retro_Bunny wrote: »
    Please can you expand on this?

    We've never claimed as my wife earns £12024 a year.
    However she has deductions from her pay pre-tax, which bring her taxable earnings down to around £11,400, hence she doesn't pay income tax at all.

    Albeit for a smaller benefit than most, are we eligible to apply?

    Just an attempt to get HMRC and all the media who slavishly follow HMRC's nonsense guidance to recognise that they are, for UK-based Income taxpayers, completely wrong. For this, overwhelming, majority the income criteria are that the taxpayer electing for MAT must not be a higher-rate taxpayer before or after the election, and that the spouse must not be a higher-rate taxpayer beforehand.

    There are cases where someone with £40k taxable would benefit from electing for MAT - and not just one or two cases but thousands. Maybe not the full £238, but a healthy sum.

    What HMRC cannot do is to admit they were wrong; what the media cannot do is to admit that they unthinkingly parrot utter nonsense.

    No change there, then. :)
  • Kyrae
    Kyrae Posts: 541 Forumite
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    Hiya! Just wondered how long folks have had to wait to receive their cheque through the post for back dated years?

    I applied in November and tax codes were changed within a couple of weeks and my husband received some tax back for the current year through his wages, but we're still waiting for a cheque for previous years. I just rang HMRC helpline and they said the previous years won't be paid until the end of this tax year so it will be around the start of May probably. Is this right?
  • Consumerist
    Consumerist Posts: 6,310 Forumite
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    polymaff wrote: »
    For MAT eligibility reasons you are trying to avoid being classified as a higher rate taxpayer. That happens when your taxable income exceeds your personal allowances plus your BRB (basic-rate-band). HMRC process pension contributions out of higher rate income by extending the BRB so the contributions fall within the BRB.

    So no reduction in your taxable income but an increase off the threshold at which you become a higher rate taxpayer.
    An interesting quirk of the system.

    I assume this is intended to provide that tax relief on pension contributions are at basic rate only.
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
  • thermalboyz
    thermalboyz Posts: 27 Forumite
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    polymaff wrote: »
    For MAT eligibility reasons you are trying to avoid being classified as a higher rate taxpayer. That happens when your taxable income exceeds your personal allowances plus your BRB (basic-rate-band). HMRC process pension contributions out of higher rate income by extending the BRB so the contributions fall within the BRB.

    So no reduction in your taxable income but an increase off the threshold at which you become a higher rate taxpayer.

    Thanks Polymaff, what I am trying to achieve is both to get the MAT and reduce total to below Higher rate earner. I am basically over the line of higher earner slightly where my personal allowance brought the total over about £1k. I am tying to find a way to not cross the line by adjust the pension to make it before 40% and below the MAT limit.

    I will investigate more in details before I make any changes. This is quite confusing and will need a thorough breakdown and understanding how it works.

    Thanks again and really appreciate your input.
  • polymaff
    polymaff Posts: 3,904 Forumite
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    Consumerist wrote: »
    I assume this is intended to provide that tax relief on pension contributions are at basic rate only.

    Yes - so simplifying HMRC's rebate to the pension provider.
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