Sensible Topic Transferable personal allowance 2015

kopernikus

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Just a note to remind DW members about a measure announced in this years (2014) budget about a transferable personal allowance. You need to apply to HMRC in the next couple of months to get your allowance in place by the start of the 2015/16 tax year. A brief extract of the HMRC leaflet is detailed below and the full document in pdf format is attached to this post. It will only save £200 for those paying income tax at the standard rate but it's got to be worth applying for.

Transferable tax allowances for married couples and civil partners.

Who is likely to be affected?
Income tax payers, employers and pension providers.

General description of the measure.
This measure will allow a spouse or civil partner who is not liable to income tax above the basic rate to transfer up to £1,050 of their personal allowance to their spouse/civil partner, provided that the recipient of the transfer is not liable to income tax above the basic rate.
Policy objective.
This measure recognises marriage and civil partnerships in the income tax system. Taking the tax liabilities of a couple together, it can provide a financial benefit where one spouse or civil partner has an income less than their personal allowance.

Background to the measure.
This measure was confirmed on 5 December 2013.
This Tax Information and Impact Note (TIIN) updates and replaces the TIIN published on 10 December 2013.

Detailed proposal.
Operative date:- This measure will have effect from the 2015-16 tax year.
HM Revenue & Customs (HMRC) is developing the process by which the married couple or civil partners will transfer their personal allowance. HMRC will ensure that the process is as straightforward as possible for customers. The lead option is that one party will apply on-line to transfer the allowance to their spouse or civil partner and HMRC will notify the recipient about the subsequent change to their tax code. HMRC recognises that some customers may need additional support to apply to transfer the allowance.

** These allowances cannot be transferred to another individual
 

Attachments

  • HMRC_TTAFMC&P_2015.pdf
    33.8 KB · Views: 14
If HMRC does implement some system to grant the allowance during the tax year, bear in mind that it can only be provisional, as entitlement depends on the income of both spouses and that cannot be known for certain until the end of the tax year. Remember also that there is an election in May and it would be very easy for a new government to abolish this allowance.
 
If HMRC does implement some system to grant the allowance during the tax year, bear in mind that it can only be provisional, as entitlement depends on the income of both spouses and that cannot be known for certain until the end of the tax year. Remember also that there is an election in May and it would be very easy for a new government to abolish this allowance.

Yes! the government of the day can always change the rules, but as things stand at the moment, if you partner, wife/husband is not working or receiving a small wage/pension, then their earned income allowance of around £10k is well in excess of their income and unused. Transferring £1030 of their unused allowance to their spouse/partner means their spouse/partner will pay less income tax regardless of their income, unless they are paying tax at the higher rate. The only way the couple will not benefit is if the one who grants some of their allowance earns more than their earned income allowance, less the £1030, if they are not, then the working partner/spouse will always benefit.
 
But, as I said, no-one can be sure of their entitlement to the allowance until the end of the tax year, when both spouses know their incomes. Entitlement could be lost by either the higher earner or lower earner having more income than expected. It is also misleading to speak of someone "not working or receiving a small wage/pension" as unearned income, such as rent, interest and dividends, also has to be counted when calculating each spouse's total income.

The amount of the allowance, by the way, is £1,060 not £1030.
 
But, as I said, no-one can be sure of their entitlement to the allowance until the end of the tax year, when both spouses know their incomes. Entitlement could be lost by either the higher earner or lower earner having more income than expected. It is also misleading to speak of someone "not working or receiving a small wage/pension" as unearned income, such as rent, interest and dividends, also has to be counted when calculating each spouse's total income.

The amount of the allowance, by the way, is £1,060 not £1030.

I think you're overcomplicating things here bamber.

What you're saying is quite correct, but millions of people and their spouses/partners are on pretty stable incomes and never even need to fill in a tax return very often, if ever.

For them it's pretty straightforward.
 
But, as I said, no-one can be sure of their entitlement to the allowance until the end of the tax year, when both spouses know their incomes. Entitlement could be lost by either the higher earner or lower earner having more income than expected. It is also misleading to speak of someone "not working or receiving a small wage/pension" as unearned income, such as rent, interest and dividends, also has to be counted when calculating each spouse's total income.

The amount of the allowance, by the way, is £1,060 not £1030.

Nit pick the finer points if you must but please don't deter peeps for claiming what they are entitled to.
I never inferred that everybody is entitled to claim this allowance, but there must be a multitude of partners/spouses who don't work or whose full earned income allowance is never used. Most people know how much their annual income is. Read the HMRC booklet & see if you qualify. If you don't claim it, you won't get it !
 
I think you're overcomplicating things here bamber.

What you're saying is quite correct, but millions of people and their spouses/partners are on pretty stable incomes and never even need to fill in a tax return very often, if ever.

For them it's pretty straightforward.

I don't see it as overcomplicating things to warn people of the potential dangers of claiming something to which they may not ultimately be entitled. Tax advice is my job and no professional would give advice on claiming this allowance without also giving the caveats I have mentioned; doing otherwise would leave one open to a negligence claim.

There could be other pitfalls when the detailed rules are published, for instance whether the election to transfer is irrevocable and whether the transferor can claim it back if the couple separate in the tax year.
 
So Bamber, you are a Financial Advisor ! Hmmm...... Say no more.
Your negative comments will probably discourage many DW members who are eligible.
Perhaps you could take a little time to read the document and offer us some free positive advice.
For your information, I am eligible, I have applied to HMRC and I will pay £200 less in tax in 2015/16.
 
Let's compare your knee-jerk reaction with what I actually said:

"So Bamber, you are a Financial Advisor ! Hmmm...... Say no more."
No, I said that I give tax advice. A financial advisor is something completely different.

"Your negative comments will probably discourage many DW members who are eligible."
All that I did was to warn people to consider the possibility that their circumstances may change before the end of the tax year, so they may no longer be eligible. That is sensible advice, not discouragement.

"Perhaps you could take a little time to read the document and offer us some free positive advice."
I read this document when it was first published in March last year, which is probably long before you did. Nothing has been published since then apart from the small increase in the allowance, as announced in the Autumn statement. As the document is little more than a policy statement, lacking detail on how it will work, it was positive advice to warn people of the possible pitfalls.

"For your information, I am eligible, I have applied to HMRC and I will pay £200 less in tax in 2015/16."
The document mentions that the system for claiming the allowance is being developed and the preferred option is online, but I searched the HMRC website today and nothing seems to be in place yet. Furthermore, when the system is in place it is not you who applies to claim the allowance, but your spouse who applies to transfer it to you. I can only assume, therefore, that you have simply written a letter to HMRC trying to claim. They do not respond very quickly to letters so, by the time they reply, there will probably be an online system in place and they will simply refer you to their website. Your premature "claim" will then have achieved nothing.
 
There you have it then. You can be proactive and write to the HMRC now. As they take a long time to respond, the sooner you write, the better. At least they know that you wish to make a claim.
Or you can follow Bambers advice, do nothing, wait, be reactive, examine the finite details of your income and wait for HMRC to stop navel gazing. As HMRC will be unaware you wish to make a claim don't be surprised if they fail to inform you how and when to claim.
 
There you have it then. You can be proactive and write to the HMRC now. As they take a long time to respond, the sooner you write, the better. At least they know that you wish to make a claim.
Or you can follow Bambers advice, do nothing, wait, be reactive, examine the finite details of your income and wait for HMRC to stop navel gazing. As HMRC will be unaware you wish to make a claim don't be surprised if they fail to inform you how and when to claim.

Again, you miss the point entirely. HMRC are currently taking 2-3 months to reply to letters so, when you receive a reply, it is likely to just refer you to the online system which will probably then be in place; they will definitely not register your letter as expressing a desire to make a claim. Writing now is therefore nothing more than the waste of the cost of a stamp. You may as well just check the HMRC website from time to time and claim when the online system is up and running.

Anyway, as I said before, it is your spouse who has to initiate the claim, so they cannot act on your letter; data protection rules and the principle of separate taxation would prevent them even telling you whether your spouse has any unused allowance.

By the way, I did not advise people to do nothing; I merely cautioned that making a claim before knowing both spouses' incomes (which can only be certain at the end of the tax year) carries some risk.
 
(Quote by Bamber) ...Again, you miss the point entirely. HMRC are currently taking 2-3 months to reply.
Hence the reason to act now - 2/3 months before you can expect a reply. They are required to acknowledge and reply to your letter.

(quote from Bamber) ....It is your spouse who has to initiate the claim,
I manage the income and tax affairs for my wife and know what both my and her income is now and what it will be in 2015/16. I wtote the letter in her name which she signed.

(quote by Bamber) ....whether your spouse has any unused allowance.
I know that my wife only uses 4k of her allowance.

(Quote by Bamber) ....I merely cautioned that making a claim before knowing both spouses' incomes
Like many other retired couples our income is fixed with measly yearly increases and I have plan our spending to suit our income well in advance.

At 77 I am still paying income tax and that stinks to be honest and a £210 reduction would be most welcome. No doubt the coming months will reveal who was right, so watch this space.
 
Here we go again.

"Hence the reason to act now - 2/3 months before you can expect a reply. They are required to acknowledge and reply to your letter."
And that reply will just refer you to the online claim, which should be available by then and you could have already used, so you gain nothing by writing now.

" I wtote the letter in her name which she signed."
So it was inaccurate for you to say previously that you had claimed.

"I know that my wife only uses 4k of her allowance."
That doesn't affect the accuracy of what I said, to caution generally.

"Like many other retired couples our income is fixed with measly yearly increases and I have plan our spending to suit our income well in advance."
My advice was not for you specifically, but general.

"At 77 I am still paying income tax and that stinks to be honest"
So what makes you think that your liability to tax should be influenced by your age? A fair tax system should be based solely on ability to pay and that is why age allowances are being phased out.
 
Quote by Bamber) Here we go again!
Oh dear, I'm SO sorry Bamber, I must have upset you.
You are certainly a bundle of joy to exchange posts with, however, since you think that my replying to your comments is becoming tiresome to you, I now give up and wish you well.
At least I got 4 thanks and 7 likes for my posts and will now leave you in peace savour you victory.
 
Website to register an interest is now open. Also some big ADS in the national press.
Just go to....w*w.gov.uk/marriageallowance.
 
I was advised today by email from HMRC that the new allowance starts from April 2015 and we will be one of the first couples to be invited to apply on line. They stated that they will advise us by email when the online application form is up and running. They also advise that identity confirmation will be required through the governments "verify" service. I don't think the beta verify site is up yet, however, I will keep this thread up to date.
 
My Mrs got and email and link to Governments Beta verification website to apply for the allowance transfer. They give you the option of using Experian, Post Office or other to verify your identity.
She started with Experian and spent 20 minutes completing the online forms only to be informed that the verification had failed despite having both a current driving licence and passport.
She the tried the Post Office with the same result.......wtf

The site leaves you a bit frustrated that you have exposed all your personal information, set user names, passwords, created memorable words etc and you are then told they cannot verify who you are and where you live. She gave up and called the 0300 helpline and was transferred to the HMRC helpline. We talked to a human being and he asked us both for our NI numbers and other details and the transfer of allowance from my Mrs to myself was DONE. problem solved.
The Beta verification website is a real pain. Don't use it unless you have to.
 
That seems to be standard for government departments my son failed his verification on the csa and my wife failed jet's on W&P site she finally got a helpful person who went through every address she had lived at. They then updated their database and then phoned us back and completed her verification and this was for her pension. It is the government computer database is useless

Sent from my Blade S6 using Tapatalk
 
Success!! Got my PAYE coding from HMRC today confirming my new personal allowance and tax code.
Poor Bamber! I hope your clients didn't follow your cautious advice.
My advice was free Gratis!!
 
Success!! Got my PAYE coding from HMRC today confirming my new personal allowance and tax code.
Poor Bamber! I hope your clients didn't follow your cautious advice.
My advice was free Gratis!!

A smug and naive comment which ultimately just embarrasses the poster by revealing his poor understanding of what I actually do. Most of my clients have no PAYE income, so have no PAYE code which can be adjusted now. Their income will be declared and any allowances claimed when a self-assessment tax return is completed after 5 April 2016. Nothing can be done before then.
 
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