Marriage Allowance and Higher Rate CGT

MA and Higher Rate CGT

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Has anyone else had the MA disallowed by HMRC when the recipient of the allowance is a basic rate income tax payer, but has higher rates of CGT to pay in the year?

HMRC have disallowed the allowance in some cases, but then allowed it in others, and in one instance, disallowed it, then sent out a tax calculation subsequently including it (and showing the lower tax due on their online account).

The legislation says the MA is only transferable if the recipient is not a higher rate tax payer, unlike the Married Couples Allowance legislation which says higher rate income tax payer - the key difference here being the word 'income'.

As a result we have continued to include it for relevant clients but are caveating the inclusion on the grounds that HMRC may disallow it.

Is HMRC still deciding whether the word 'income' is missing from the legislation?

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By Hugh Jarssis
12th Aug 2016 13:07

That isn't what the legislation says at all. If the legislation said that anybody that was an additional rate taxpayer would be able to claim the reduction. What the legislation says is that the taxpayer must not be liable to tax at a rate other than the basic rate, Scottish basic rate, dividend ordinary rate or the starting rate for savings.

Whilst it does not refer to income tax, all of those rates are defined as being rates of income tax, whereas the CGT rate is the CGT rate (which varies according to the extent that the income tax basic rate band has not been fully utilised. HMRC's "interpretation" is ridiculous.

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