Marriage allowance.
Discussion
I took my wife’s marriage allowance ( now £1260) when I was working which made sense as she wasn’t earning enough to pay tax.
Now we’re both retired we’re unsure if to carry on or not. We both get the state pension and both have small private pensions. She gets £180/ month and mine are £280, both of which are taxed of course.
I’ve got a feeling as I get a larger private pension it would still be better for me to keep it but I’m unsure of the figures.
Anyone help?
Now we’re both retired we’re unsure if to carry on or not. We both get the state pension and both have small private pensions. She gets £180/ month and mine are £280, both of which are taxed of course.
I’ve got a feeling as I get a larger private pension it would still be better for me to keep it but I’m unsure of the figures.
Anyone help?
I did the reverse a few years ago as I was living off savings and a small pension, so was under my allowance, so I gave my wife the marriage allowance.
It doesn't really matter overall once you're both over any allowances, as per my calculations below, though I'm guessing what you both get for State pension as being the same at £12,000/year. You'll have to recalculate with your actual figures, but maybe this will give you a start:
With you keeping the marriage allowance:
Her allowance £11,310
Your allowance £13,830
Her income including £180/month (£2,160/year) and State pension £14,160
Your income including £260/month (£3,360/year) and State pension £15,360
Her taxable income above her allowance is £2,850 at 20% means she would pay £570 in tax per year.
Your taxable income above your allowance is £1,530 at 20% means you would pay £306 in tax per year.
Total annual tax bill as a couple is £876
If you give her back the marriage allowance, so both have an allowance of £12,570 then the figures would be:
Her taxable income above her allowance is £1,590 at 20% means she would pay £318 in tax per year.
Your taxable income above your allowance is £2,790 at 20% means you would pay £558 in tax per year.
Total annual tax bill as a couple is £876
Based on that, as a couple it makes no difference once you both go over the allowances. Depends on whether you have joint or separate finances I suppose.
Be aware that if you decide to take it back, that it won't kick in until the next tax year. I missed it by 1 day, so ended up not getting it back until the next tax year after I'd started taking a bigger private pension.
<Waits to be pulled apart for some incorrect calculation, so please double check my figures>
It doesn't really matter overall once you're both over any allowances, as per my calculations below, though I'm guessing what you both get for State pension as being the same at £12,000/year. You'll have to recalculate with your actual figures, but maybe this will give you a start:
With you keeping the marriage allowance:
Her allowance £11,310
Your allowance £13,830
Her income including £180/month (£2,160/year) and State pension £14,160
Your income including £260/month (£3,360/year) and State pension £15,360
Her taxable income above her allowance is £2,850 at 20% means she would pay £570 in tax per year.
Your taxable income above your allowance is £1,530 at 20% means you would pay £306 in tax per year.
Total annual tax bill as a couple is £876
If you give her back the marriage allowance, so both have an allowance of £12,570 then the figures would be:
Her taxable income above her allowance is £1,590 at 20% means she would pay £318 in tax per year.
Your taxable income above your allowance is £2,790 at 20% means you would pay £558 in tax per year.
Total annual tax bill as a couple is £876
Based on that, as a couple it makes no difference once you both go over the allowances. Depends on whether you have joint or separate finances I suppose.
Be aware that if you decide to take it back, that it won't kick in until the next tax year. I missed it by 1 day, so ended up not getting it back until the next tax year after I'd started taking a bigger private pension.
<Waits to be pulled apart for some incorrect calculation, so please double check my figures>
Gassing Station | Finance | Top of Page | What's New | My Stuff