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Posted Sat, 26 Oct 2024 09:35:04 GMT by Phill Townsend
As I understand it: For a couple both on the Basic Rate Tax Band each person has a Starting Rate for Savings of £5,000 reduced by £1 for every £1 over £12,570. However, if Marriage Allowance has been applied to the couples Tax Allowances... Partner-A would have a Basic Rate Tax Allowance = £11,310 Partner-B would have a Basic Rate Tax Allowance = £13,830 gov.uk/apply-tax-free-interest-on-savings states: "If your other income is £17,570 or more you are not eligible for the starting rate for savings." Is this pedantically correct or just illustrated guidance? How would the Starting Rate for Savings be applied to a couple claiming Marriage Allowance? I can see 3 likely scenarios: A) Each partner retains their £5,000 Starting Rate Allowance, the upper limit for 'other income' becoming £16,310 and £18,830 respectively. B) The Upper limit is retained at £17,500 and the Starting Rate Allowance adjusted to £6,260 and £3,740 respectively. C) Both the Upper Limit of £17,500 and the £5,000 Allowance are retained, effectively reducing the savings limit to £3,740 on one of the partners. Scenario (A) seems the most likely but I would appreciate confirmation/clarification. Thanks.
Posted Wed, 13 Nov 2024 17:05:09 GMT by HMRC Admin 20 Response
Hi,
The marriage allowance works by reducing the personal allowances of the transferor and provides a tax credit to the spouse or civil partner who receives this to reduce their tax bill.  
Each partner would retain their £5000 starting rate if applicable.
Tax on savings interest
Thank you.

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