Married allowance. Tax rebate

[Darcydog]

In these difficult times it’s may be worth people’s while to check this out. We did and I just received a £480 tax rebate.

It’s all about swapping 10% of your income tax personal allowance between spouses.

Personal allowance is £12,500 and both spouses have the same allowance. But if one spouse is a taxpayer and the other isn’t - then between you you can ask HMRC move 10% of the spouses allowance that is not being used to the spouse who is a tax payer.

So:-

Spouse A earns £15000

Spouse B earns £8000


Spouse A has £12500 PA so pays tax on £2500 of earnings

spouse B also has £12500 PA but pays no tax as earnings are less than the PA


They both ask for the 10% married allowance to be moved from Spouse B to Spouse A. So A’s PA becomes £12500 + £1250 = £13750

And B’s becomes £12500 - £1250 = £11250.

Spouse B still pays no tax but Spouse A can now earn £13750 before any tax is taken.

That’s a benefit of 20% of £1250 = £250 a year.

And the best bit is that you can go back five years.

And if your earnings between spouses fluctuate - you can chose which years to apply to which spouse.

WATCH OUT THO’ for the scam websites that purport to be government sites but you end up paying them a huge chunk of your rebate. There is an excellent
www.gov.U.K. - apply for marriage allowance website - just make sure you are on that one to check it all out.

It was well worth trawling back through our records back in December on a dark wet day as a cheque for just over £480 has quite made my day!!

[macafee2]

We have done just as you say and I have a question.

what is the difference between us doing this to avoid paying tax and large corporations
working within the law to avoid paying tax?

macafee2

[another_clean_sheet]

Originally Posted by macafee2

We have done just as you say and I have a question.

what is the difference between us doing this to avoid paying tax and large corporations
working within the law to avoid paying tax?

macafee2

If it within the law it is tax avoidance. Outside the law it tax evasion.
Putting money into ISAs is tax avoidance

[Darcydog]

Originally Posted by macafee2

We have done just as you say and I have a question.

what is the difference between us doing this to avoid paying tax and large corporations
working within the law to avoid paying tax?

macafee2

We a a bit unusual in the U.K. in that individual tax allowances are just that - individual.

In France for example -as I understand it the tax allowance is based on the family. So if the same system applied today for the U.K. - husband and wife would be granted 2x£12500 = £25,000 total allowance and they are not that bothered about who individually gets allocated what.

This ability to “share” a portion of the individual allowance is a step in the right direction.

They did a similar thing with ISA’s - which as ACS says is legal tax avoidance - not tax evasion.

On death an ISA used to “crystallise” and had to be paid out into the estate. Now a spouse can inherit the ISA(s) and continue with them if they wish.

Lots of sensible rule changes have come in of late. For example Pension Drawdown used to suffer a 55% tax hit on death of the last surviving spouse!!

Absurd that the largest beneficiary of someone’s pension pot was not their family but the Taxman!

Thankfully that is no more.

[CLINTE]

I would just like to add the if one spouse was born before 6th Apr 1935 couples are in a position to claim "married couple's allowance" ( MCA ) which depending on circumstances may be better than claiming "marriage allowance" . The details are on the website .

Clinte

[rontug]

Originally Posted by Darcydog

In these difficult times it’s may be worth people’s while to check this out. We did and I just received a £480 tax rebate.

It’s all about swapping 10% of your income tax personal allowance between spouses.

Personal allowance is £12,500 and both spouses have the same allowance. But if one spouse is a taxpayer and the other isn’t - then between you you can ask HMRC move 10% of the spouses allowance that is not being used to the spouse who is a tax payer.

So:-

Spouse A earns £15000

Spouse B earns £8000


Spouse A has £12500 PA so pays tax on £2500 of earnings

spouse B also has £12500 PA but pays no tax as earnings are less than the PA


They both ask for the 10% married allowance to be moved from Spouse B to Spouse A. So A’s PA becomes £12500 + £1250 = £13750

And B’s becomes £12500 - £1250 = £11250.

Spouse B still pays no tax but Spouse A can now earn £13750 before any tax is taken.

That’s a benefit of 20% of £1250 = £250 a year.

And the best bit is that you can go back five years.

And if your earnings between spouses fluctuate - you can chose which years to apply to which spouse.

WATCH OUT THO’ for the scam websites that purport to be government sites but you end up paying them a huge chunk of your rebate. There is an excellent
www.gov.U.K. - apply for marriage allowance website - just make sure you are on that one to check it all out.

It was well worth trawling back through our records back in December on a dark wet day as a cheque for just over £480 has quite made my day!!

Best way contact your own tax office, very helpfull and can be done over the phone, and only need to do it once, not every year. unless circumstances change of coarse