emanresu
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Marriage Allowance and Dividend Income

Met this?

This is probably only resolvable once it has happened.  A spouse / partner has an income of, say, £8,000 pension and £12,000 dividends in 2016/17.  The spouse / partner applies for Marriage Allowance Transfer.  Assuming that the other spouse / partner qualifies as a recipient of MAT - and that HMRC applies the legislation correctly - what happens?  It could be that the recipient gets a £220 credit, but what of the applicant?  More of the applicant's income will be taxed, but is that £1,100 at 7.5%?

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19th Aug 2017 17:47

HMRC will say that the transfer's not due because the spouse/partner's income is £20000.

Care to dispute at FTT ?

You'd be doing us all a big favour .......

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to lionofludesch
19th Aug 2017 18:54

OK, but has anyone got HMRC to accept/deny a UK-resident MAT application where the applicant had qualifying "step 3" income?

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19th Aug 2017 18:40

If HMRC were to accept and process the transfer then the tax affect on the transferor will need to be ascertained by generating a tax computation with the amount of the reduced PA used in place of the PA and optimising the result accordingly. In this particular case the tax payable would indeed increase by 7.5% of 1,100 using the most efficient allocation of PA.

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to Tim Vane
19th Aug 2017 19:02

Which might come as quite a shock to HMRC. They've spent some time trying to make sure no-one can "exploit" MAT, but this looks like a scenario - and not a particularly rare one - where HMRC end up £137.50 down on the deal.

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to emanresu
19th Aug 2017 22:22

Surely, if HMRC were never down on the deal, no-one would make a claim.

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to lionofludesch
20th Aug 2017 09:41

HMRC would expect to be "down on the deal" within their - and HMT's - expectation of MAT's effect. I doubt that either organisation thought/intended that a particular class of tax-payer that they appear to detest would be due such a gift.

BTW, thanks to the misleading nature of official and media description of MAT, many accepted MATs have resulted in no nett revenue loss to HMRC.

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to emanresu
20th Aug 2017 10:13

Well, I think we all agree that MAT is a poorly thought out, poorly admistered provision, with huge numbers of people who would benefit not taking up the option for one reason or another.

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to emanresu
21st Aug 2017 11:01

emanresu wrote:

Which might come as quite a shock to HMRC. They've spent some time trying to make sure no-one can "exploit" MAT, but this looks like a scenario - and not a particularly rare one - where HMRC end up £137.50 down on the deal.

But the usual state of affairs in the most common application of the transfer is for HMRC to be down £220 on the deal, I don't see the issue here.

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to Duggimon
21st Aug 2017 12:51

See my post of 20th Aug 2017 09:41

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