This tax break for married couples

[ISNT]

How are they going to do it then? How are they going to work out who qualifies and pay it to them? Who are they going to pay it to - will it be £75 for each person?

It can't be through PAYE as employers don't know marital status and not everyone is employed. I can't think what the mechanism will be to work it out. Obviously loads of people don't fill out tax returns.

Anyone?

Irritable Duncan Syndrome on Any Questions last night made a reference to a reform of the whole PAYE system coming up in a few years' time. Coincides with the married people's tax allowance in terms of timing. He mentioned that it would make it easier to assess household income - re CB anomaly. PAYE is obviously struggling to keep up with personal taxation - witness the massive adjustment exercise earlier this year. It's too rigid, too slow to respond and doesn't reflect personal circumstances all that well.

I would assume that, as part of that reform, any allowances will apply individually but with the ability to transfer them from non taxpayers to taxpayers as appropriate. I don't see a return to the bad old days when a woman's income and assets were deemed to be her husband's for tax purposes.

I can't remember exactly how they used to know who was entitled, but as regards who gets it, last time around you could 'elect' to give your allowance to your spouse. This could be used for tax planning (or avoidance/evasion depending on what your views are cf other threads!) in that if you had a spouse just over the higher rate tax threshold, you could give them the full allowance and they could then just pay basic rate etc. If you're not employed (and have no significant taxable income) but your spouse is then it certainly used to make sense for the working spouse to get all the allowance.

You tell your tax office the info to work out your tax code, your employers work from that (rather than the other way round) so it can be done (and used to be done) through PAYE.

Looks back not-very-fondly at tax exams with MrA, his wife V, their children C and F and all kinds of complex shuffling around of allowances...mind you we still had MIRAS in the questions then as well, that's one thing they avoid nowadays!

Yes but doing it through PAYE isn't going to work as stacks of people are self-employed. And in many couples That's why I'm confused. I can't see that there is a single mechanism for working this out, and if not, then won't they have to bring a new one in which will cost £££?

I'm thinking that this one hasn't been thought out either...

Obviously too confused to construct conherent posts!

@Acekicker... I did the same tax exams, I think. Been trying to think what might usefully replace PAYE, be able to reflect household income but be simpler and more flexible at the same time. Not a clue so far.

Self-employed would presumably add the information 'married' on their self-assessment form. So they don't get the allowance in advance but they get it reimbursed retrospectively, as it were.

So if you have a self employed person and their spouse is employed, they're providing the info in different ways and getting paid at different times.

or if one is working and one is not, the one who is not doesn't have any way of accessing it? Or if one isn't working do they not get that half?

I don't think they've thought this one out either. FGS.

ISNT - it would catch up for a SE and an E couple after the first year, the SE person would be a year 'behind' as it were through self-assessment but over time they'd get the same benefits, assuming they do it in a similar way to previously. If they wanted the benefit straight away and SE and E had similar incomes then they could elect for the E spouse to get it all.

It's a 'couples' allowance - when it was last in place the couple could decide how to use it, you were entitled to all of it irrespective of whether you both worked or just one. If one of you works and the other doesn't then generally the working spouse would claim it so they paid less tax (assuming the non-working spouse had no taxable income).

Chil - I still get nightmares about qualifying corporate bonds, and the massive great IHT/CGT questions they threw at you. I think I only passed because I used to pick up the 'easy' marks like addressing the letter properly and making sure I'd dealt with MCA before the complex tax planning bits. Sad though it may be to say it I've also been pondering how the hell they'll restructure/replace PAYE... presumably the starting point will be whichever Big4's turn it is, a fuck load of brown paper, some post it notes and a 'workshop'

That's what self-assessment is for. In your example, both the husband and wife would submit their individual returns for the previous tax year - one for their self-employed earnings, the other for their PAYE earnings - and anything they were owed in the form of a married couple's allowance would be paid back as a rebate.

So everyone married would have to fill out a tax return? Isn't that a huge addition to admin compared to what happens at the moment?

I have to say I think it's a crap idea anyway but thinking about it, it's probably going to end up costing £££ getting this set up isn't it.

So for eg at the moment I do a tax return and DH doesn't, he'd have to do one as well?

And all the pensioners?

I file a tax return online ... it's not that much admin and if you get a few quid back that's quite an incentive. So do my pensioner parents, incidentally, because their modest income comes from various income sources... state pension, private pension, savings, shares... and PAYE often gets it wrong.

I think HMRC promotes the online tax return idea because it's individuals doing the hard work for them and the online aspect means less paper flying about. I always get my rebate back within a few days of filing the return straight into my bank account. They just have to make the occasional check.

I do a paper return, got the letter detailing my refund a month ago nearly, and am still waiting for it to hit my account. I am told it was pulled for 'security checks'. They've been refunding me into the same bank account for 3 years, for about £300 a go; don't see what they need to check.

People doing their own tax returns and taking it away from PAYE etc leaves much more room for people to try and fiddle it though...

I would have thought that every single married person in the country filing a tax return would be a disproportionate admin cost.

Plus may pensioners aren't that computer savvy...

I think it's another ill thought out idea. If they were serious about saving money they would be setting things up that can be run through existing systems. These ideologically driven ideas are going to cost more than they save.

I read the married couples allowance will offset the amount saved by the benefits cap - that seems totally unreasonable to me but I guess that's another thread.

Even if the systems don't change, the PAYE system used to cope OK with the married man's tax allowance in the past. As for the money-saving aspect it's all swings and roundabouts anyway when it comes to taxation. Brown was the master of the stealth tax - always messing about with the tax thresholds, personal allowances, rules on NI. Not to mention the reduction of hundreds of previously 'allowable' tax-exemptions. All to prop up his ideologically-driven expenses like tax credits for high earners, child trust funds and other peculiar ideas.

I don't see how it can work chil. It seems fiendishly complex.

I also don't understand the point of it... it's literally some money just for being married? Irrespective of any other circs? I don't understand. Other benefits are usually based on things which cost eg child benefits recognise that children cost money. Being married doens't cost you money does it? Or is it to recognise the fees that you pay to the vicar/registrar?

It is literally some money for being married. Always was. In the old days, women often gave up jobs when they got married and so the allowance was to reflect that a married man had to support two people rather than one person. Also, in the old days, a woman's assets were considered her husband's on marriage... brr!

These days, it's being proposed to reflect that married couples and the children they produce are statistically more stable and less problematic (i.e. cheaper on the state) than unmarried couples, single parent households and other constructs. I don't personally think that £150 tax allowance (boils down to £50 cash in your pocket - £1 extra a week) will encourage anyone to get married or stay married. I'm not sure it will see the light of day, to be honest.

The stability etc in married couples and the children they have though, isn't because they are married. It's because the people who marry are a self-selecting bunch of committed and fairly traditional people (vast generalisation). The actual act of marriage has nothing to do with it. If you incentivised marriage so that everyone did it, the outcomes etc of children wouldn't change as the people having the children would still be the same people.

It's all silly.

The married person's allowance worked within the PAYE system not many years ago. Not sure why it would be a problem now.

Because not everyone is on PAYE mmeblueberry.

When was it cancelled?

I am going to have to do some digging aren't I!

Because not everyone is on PAYE mmeblueberry.

When was it cancelled?

I am going to have to do some digging aren't I!

OK from here

married couple's tax allowance is in the hands of the husband, or for civil partners the highest earner. they can decide to transfer some/all of it to the wife / lower earning partner.

I imagine it won't be reintroduced on that basis

So if you are not on PAYE, then you do a tax return. You declare your status there. No biggie.

The thinking behind it must be that married and 2 parent households cost the state a lot less than single parent households on the whole so the Government is seeking to incentivise this by offering a small tax break. Personally I think this is ridiculous particulary when you consider the national debt and I don't believe the Government should engage in this direct social engineering.

it's £150, is it spread over each months pay or do you get it in one lump sum. Is it even worth having?