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Tax Return - Why does it say my dad owes tax!

8 replies

kerry19834 · 08/09/2024 17:22

I have been doing self assessment forms for my parents for the 1st time, they have very simple incomes, state pension, private pension and interest from savings and a tiny amount of shares in non isa holdings.

They are both well within the 20% income tax band.

The reason for the self assessment form is a one off chargeable event as they cashed in a life insurance policy which they held 50 50 and profits are treated as tax paid.

I completed Mums tax return and that said 0 tax owed. When I did dads it says he owes £231 in tax, I think this is because mum only had an income of around 10K and they benefited from the transfer of a portion of her tax band to dad under the marriage tax allowance.

This is the only thing I can think this £231 can be, Dad pension is a final salary scheme paid by his ex company and, savings interest was £91, all his other money is in ISA. He did go £10 over the £1K dividends allowance, but he says the tax has been paid on that.

Therefore presuming it is the difference on the married tax allowance, does this get taken off somewhere in the background and corrected after submission, there is no place I can see on the online form to reference it, not would I know how to calculate if the £231 is for that, but it is the only obvious thing as their finance is so simple.

OP posts:
Tulip8 · 08/09/2024 17:26

Well their tax codes will tell you the answer to that.

anniegun · 08/09/2024 17:37

When you fill in the SA online it shows the calculation so you can check it is correct before submitting it

Littletreefrog · 08/09/2024 17:46

What is his tax code? It might be his interest as the savings allowance has reduced this year.

Maurepas · 08/09/2024 18:01

Is this for tax year 2023-2024?

BESTAUNTB · 08/09/2024 21:17

It looks as if he hasn’t claimed the Marriage Allowance on the tax return even though he received it in 2023/24 and was entitled, so the system has assumed he’s underpaid tax .

Marriage Allowance is worth about £250 so if you correct the return to show that it was transferred in, it’ll get rid of the underpayment and show that actually he is owed about £10-£20.

kerry19834 · 09/09/2024 13:20

BESTAUNTB · 08/09/2024 21:17

It looks as if he hasn’t claimed the Marriage Allowance on the tax return even though he received it in 2023/24 and was entitled, so the system has assumed he’s underpaid tax .

Marriage Allowance is worth about £250 so if you correct the return to show that it was transferred in, it’ll get rid of the underpayment and show that actually he is owed about £10-£20.

Fab, thanks do you know where I reflect that as I could not see where in the online for, or does it happen by magic in the background. He says he has applied, thus I guess when I put the tax paid from his P60 in that is the difference.

The self assessment assumes he has under paid because it does not know he has calimed it as I have not enteredt details.

I am scared of getting dad a fine

OP posts:
Littletreefrog · 09/09/2024 17:10

kerry19834 · 09/09/2024 13:20

Fab, thanks do you know where I reflect that as I could not see where in the online for, or does it happen by magic in the background. He says he has applied, thus I guess when I put the tax paid from his P60 in that is the difference.

The self assessment assumes he has under paid because it does not know he has calimed it as I have not enteredt details.

I am scared of getting dad a fine

If your mother has claimed it last year (it is the transferor who claims not the recipient) and not cancelled it it would be reflected in your father's tax code this year. What is his tax code? It is possible for him to be benefiting from marriage allowance and still have tax to pay dependent on his income. State pension increases every year and isn't taxed at source so catches people out when it pushes them into needing to pay tax.

BESTAUNTB · 09/09/2024 19:48

kerry19834 · 09/09/2024 13:20

Fab, thanks do you know where I reflect that as I could not see where in the online for, or does it happen by magic in the background. He says he has applied, thus I guess when I put the tax paid from his P60 in that is the difference.

The self assessment assumes he has under paid because it does not know he has calimed it as I have not enteredt details.

I am scared of getting dad a fine

Ah looks like that is the issue then. Yes, it should happen in the background if your mum definitely transferred it out, was a non taxpayer in 2023/24 and they’re linked on HMRC systems. I would get your parents to give HMRC a call to find out why it hasn’t worked. Your mum would need to talk them first I think, to state that she’s the transferor.

if her taxable income was more than 12570 they weren’t eligible.

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