Individuals report surprise tax bills when completing self-assessment tax returns and using the marriage allowance
28 January 2020
As widely publicised, the deadline for filing self-assessment tax returns is 31 January 2020 and many individuals will have already completed or, are in the process of completing, the forms at the time of writing.
Some HMRC customers have confirmed that there is an issue when trying to take advantage of their spouse’s annual marriage allowance and have reported that they have received unexpected tax bills. They have also advised that HMRC have told them to proceed with filing their returns anyway.
Speaking to This is Money, one affected party confirmed that he had utilised his wife’s annual marriage allowance since 2016 with relative ease, but this year received notification that he owed an unexpected £238. In previous tax years, the right level of tax had been correctly applied and the additional allowance from his wife had transferred seamlessly but this didn’t happen upon completion of the self-assessment tax return for tax year 2018-19.
The same individual stated that, when he spoke to HMRC, they confirmed that several people had reported issues with the marriage allowance.
The marriage allowance permits individuals to transfer up to £1,250 of their Personal Allowance to their husband, wife or civil partner to reduce the amount of tax they pay, where they earn more than the individual making the transfer. Those in receipt of the allowance will receive a tax code ending in ‘M’, and those who have relinquished the allowance will see their tax code change to ‘N’.
When approached in relation to the issue, a spokesman for HMRC stated that the marriage allowance isn’t taken into consideration until after the self-assessment tax return has been processed by HMRC:
“The tax reduction that a recipient of Marriage Allowance receives is not taken into account until the self-assessment tax return is processed.
'When a return is processed by HMRC, the tax reduction will take effect in the calculation.”
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