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Can I Reverse 2016/17 Marriage Allowance Claim?

Wife's Income Level Jumped & She Wants to Stop Marriage Allowance Transfer. Any MA Experts out There

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Wife has always had low income so her SA Returns transferred Marriage Allowance to Husband (He is not a client). So each claim has been made AFTER the end of each tax year.

Wife's estimated 2016/17 tax return went in last minute in late January 2018 with a claim as ususal to transfer marriage allowance to husband.
Her 2016/17 accounts have now been completed with a big jump in income (not higher rate). So she now want to stop the Marriage Allowance transfer to husband for 2016/17.

If I now revise wife's 2016/17 tax return with no reference to Marriage Allowance transfer at all, what will happen bearing in mind the original estimated 2016/17 tax return made a claim to transfer to husband. Will that revision reverse the claim made on the original estimated 2016/17 tax return.

Or has the horse bolted?

 

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17th Jan 2019 17:03

Not sure this helps but I have a client who separated from her husband after she had transferred her MA to him in 2016/17. She had to phone HMRC herself (I could not do it as agent via her SA return on line) and I understand it(the cancellation) only became/becomes effective from the start of a subsequent tax year - in her case 2018/19

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to memyself-eye
17th Jan 2019 17:44

Thanks for that. But I think it makes some sort of difference if you make the claim through the SA return after the tax year in question.
However, I can see nothing to suggest you can reverse a tax return claim after a claim has already been made for that year.

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17th Jan 2019 17:08

MA is a reyt mess, isn't it ?

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to lionofludesch
17th Jan 2019 17:42

Sure is!

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17th Jan 2019 17:35

Yes - another whizz idea at budget time which turns into a crock of SS-H- one- tea...

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By SXGuy
17th Jan 2019 19:36

What if you can re submit both husband and wife's tax return? One has to be marked the transfeerer the other the receiver, so in theory if both are amended could that work?

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to SXGuy
17th Jan 2019 20:00

Don't think that would work. You seem to be referring to your own tax software entries. Remember that it only needs the transferor to claim to transfer (the wife in this case).
The husband's box in the tax software is only so that the software tax calculation can generate the husband's tax calculation correctly. He has no entries at all on his own tax return to show that his wife has transferred the allowance across. In fact, he may be oblivious that she has done so until HMRC send out their own SA302 generated because of the marriage allowance transfer.

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By SXGuy
to penelope pitstop
17th Jan 2019 20:12

Ah right I see. Oh well!

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17th Jan 2019 22:11

As the net effect is to reduce his liability by increasing hers by £220, so no net effect on the family, is there any point in trying to reverse it now? Or does it knock through to increased POA's & interest charges (still unlikely to be huge)?

Probably cost more in fees to bu99er about with it all for negligible change

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to Paul D Utherone
17th Jan 2019 23:24

If it can't work wife will demand the cash saving from the husband.

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to Paul D Utherone
18th Jan 2019 09:26

Paul D Utherone wrote:

As the net effect is to reduce his liability by increasing hers by £220, so no net effect on the family, is there any point in trying to reverse it now? Or does it knock through to increased POA's & interest charges (still unlikely to be huge)?

It can mean one spouse paying tax on £1100 at 7½% and the other claiming £220. I have a 2017/18 case where this happened.

HMRC seem to have gone about implementing it in a weird way, seemingly calculated to produce ridiculous anomalies.

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to lionofludesch
18th Jan 2019 14:27

True. Never presume, as I just did :)

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18th Jan 2019 10:31

The legislation preventing a withdrawal of the MA claim for 2016/17 being made now is here:-

http://www.legislation.gov.uk/ukpga/2014/26/section/11/enacted

Scroll down to 55D(6)

Basil.

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18th Jan 2019 14:25

Why bother? It is very, very unlikely that they will be worse off by remaining within MAT

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to emanresu
18th Jan 2019 16:16

Maybe not with the folk we tend to deal with.

But for folk who are at the bottom of the job market, sometimes in work, sometimes not, it's quite common.

Unfortunately, it's those people who could really do with the extra £220 (or whatever the going rate might be) and can't afford to lose it.

A provision brought in to help the low paid can present them with real difficulties.

It should be like it was before independent taxation - husband doesn't use his allowance, it goes to the wife. Admittedly, it was a one-way street in those days.....

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to lionofludesch
18th Jan 2019 15:55

How do even the low-paid lose? The way HRMC have implemented MAT, one receives 20% of X, the other pays no more than 20% of X - sometimes only 7.5% of X - or even 0% of X.

Go back far enough and the wife needed no allowance anyway as her income was assumed to be her husband's responsibility !

Something Comrade Corbin has said he would like to take us back to.

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to emanresu
18th Jan 2019 16:17

Not rocket science, eman

Husband £13000
Personal £11000
Taxable £2000
Tax £400

Wife £9000
Personal £11000
Tax £ nil

Total Tax £400

Or ..........

Husband £13000
Personal £ 9900 (being 90%)
Taxable £3100
Tax £ 620

Wife £9000
Personal £11000
Taxable £ nil
MAT £ nil (£220, restricted to tax paid)

Total Tax £620

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to lionofludesch
18th Jan 2019 16:30

BUT that is the tax computation. When it comes to the liability to pay, where has the Beneficiary's £220 MAT credit gone?

Total Tax Computation of £620
LESS credit to Beneficiary's tax account of £220

Total Tax payments of £400

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to emanresu
18th Jan 2019 16:48

emanresu wrote:

BUT that is the tax computation. When it comes to the liability to pay, where has the Beneficiary's £220 MAT credit gone?

Total Tax Computation of £620
LESS credit to Beneficiary's tax account of £220

Total Tax payments of £400

Good luck getting that repaid.

I think you'll be disappointed.

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to lionofludesch
18th Jan 2019 18:37

That it is happening is a matter of record.

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to emanresu
19th Jan 2019 09:41

emanresu wrote:

That it is happening is a matter of record.


What is ?
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to lionofludesch
19th Jan 2019 10:47

The credit to the beneficiary.

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to emanresu
19th Jan 2019 12:23

emanresu wrote:

The credit to the beneficiary.

And this doesn't appear on the SA302, it appears on the taxpayer's statement of account, does it ?

Well, it seems that this transferrable bit is better than the taxpayer's own personal allowance, in that he can get a cash rebate for any allowance he doesn't use !!

This taxpayer you speak of - his income is less than the personal allowance, isn't it ?

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to lionofludesch
19th Jan 2019 14:37

You know that it does.

You could look at it this way.

No, it is the benefitting tax payer in your own "not rocket science" example.

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to emanresu
19th Jan 2019 15:00

emanresu wrote:

No, it is the benefitting tax payer in your own "not rocket science" example.

To be clear - you're saying the benefiting taxpayer has an income less than personal allowance and he gets a repayment of £220 (or whatever the rate was for the year in question).

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to lionofludesch
19th Jan 2019 15:43

I spoke to HMRC at length when they were still forming their policy on how to perform the MA Transfer - at a time when that policy was shifting from a true £ for £ transfer to a fixed figure. When I made the very point you're trying to make, their response was that the amount they would credit to the tax account would be treated in the same way as would an overpayment of tax by the tax-payer. So, with your "repayment" replaced by "credit", that is my understanding

Now this wasn't one of the telephone front-line staff, but one of the "inward-facing" policy wonks, so I take her word for it until I see her disproved

Well, not absolutely take her word, which is why I used the expression "very, very unlikely that they will be worse off by remaining within MAT" in my original contribution to this thread.

Neverthless your craziest of examples, where the one paying real tax elects to transfer allowance toward someone who pays zero tax does appear to be "safety-netted" by this process.

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to emanresu
19th Jan 2019 15:57

emanresu wrote:

Neverthless your craziest of examples, where the one paying real tax elects to transfer allowance toward someone who pays zero tax does appear to be "safety-netted" by this process.

It's not a crazy example. It's an example of what might happen in a change of circumstances in a low paid family.

For instance, wife has decent job, husband is looking for work. Transfers his MA to wife.

Following year, wife gets pregnant, leaves her job. Husband finds work, too late to cancel MA transfer.

Uncommon ? Maybe. Crazy example ? Not really, could easily happen. Hurting people who really need that extra £200+ ? Definitely.

Anyway, getting back to the point, it's a tax reducer, it'll reduce your tax as far as zero but it's not repayable.

My "crazy example" stands.

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to lionofludesch
19th Jan 2019 16:16

That a circumstance is crazy is no reflection on those caught up in it or those who hypothesise it.

Amen.

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to emanresu
18th Jan 2019 16:21

emanresu wrote:

Go back far enough and the wife needed no allowance anyway as her income was assumed to be her husband's responsibility !

There was a Wife's Earned Income Relief.

In many ways, taxing the family as a unit was fairer. And, of course, we still do tax husband and wife as a unit for some purposes. HICB, for instance, or CGT on assets transferred between spouses. Is it right that a family with one earner on £60000 has to pay back all the Child Benefit, whilst a couple on £50099 each get to keep the lot ? I would suggest no.

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to lionofludesch
18th Jan 2019 16:41

"There was a Wife's Earned Income Relief" but "far enough" back, there wasn't - and it seems that "Cob" yearns for those days. As you say, there are arguments for treating the, what shall it be called, Residential Economic Collective as the quantum which is taxed. True Cob dogma in action !

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to emanresu
18th Jan 2019 16:52

Well, the thing about tax allowances for the low paid is that they're no use if you have insufficient to cover them.

Give me a million pound personal allowance and I'll have nearly a million pound balance of allowances.

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to lionofludesch
18th Jan 2019 18:47

True and, maybe, that is where the Personal Allowance is outstripping other rungs on the tax ladder. Going back to spouses being a chattel, though, might not go down well with just over half of the population - even though it appeals to professional nostalgics such as Cob and his oppo.

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21st Jan 2019 10:38

All you posters have spent the £220 tax saving on lost fees when contributing to this forum and this question - well done and I go with the idea of doing nothing.

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