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Posted Mon, 07 Nov 2022 11:15:14 GMT by Rob Wilson
I hope someone can help me with a question on Personal Allowance and tax rates. If my personal allowance is slightly bigger because of tax relief from such things as marriage allowance and and other expenses, does this then mean that I can make more over the 40% limit and not get taxed at the 40% I know that the current rate is £12570 and that would mean I can make £37,700 before going into the 40% bracket (£50,270) However, if my Personal allowance is £16,000, does it mean that I would still get taxed at 20% on the NEXT £37,000, even though it would mean that my total income is over the £50,270? Or is it a case of that because my because my Personal Allowance increases, my 20% taxable amount will decrease? IE, in my case above, because my personal allowance has increased by £3430, will I now be taxed at 20% on the first £34,270. I suppose that basically the questions is does the £37,000 move up and down depending on your personal allowance or is it fixed? Hope that makes sense Many thanks.
Posted Thu, 10 Nov 2022 12:35:36 GMT by HMRC Admin 32

If you have expenses approved, you would add this on top of the £12570 Personal Allowance figure, and your higher rate threshold would be £37,700 above that amount.

Thank you.
Posted Thu, 10 Nov 2022 13:44:30 GMT by Rob Wilson
Hi HMRC Admin 32, thanks for your reply. So, I have Marriage Allowance ( £1260) and also an approved Working at Home Expense (£312) Therefore, my PTA would be £14,142, and that would mean that I would not pay 40% tax until I went over £51,142 overall income? is that correct?
Posted Thu, 10 Nov 2022 14:39:01 GMT by Rob Wilson
Also...... if my Personal Tax Allowance was less than the standard amount, say £5000, would this mean I pay 20% on the first £37,000 up to £42,000, then after that I pay 40% on anything else? Thanks
Posted Mon, 14 Nov 2022 02:20:47 GMT by Bella Boo
Not HMRC but your personal allowance is only ever a maximum of 12570. You may have a tax free allowance from your tax code of more than this, but that will be because it's made up of more than your personal allowance, not because your personal allowance has increased. The marriage transfer is also a tax reducer rather than an allowance or extension to rate band. So the transfer is ignored when determining which rate bands your income falls into. Its only after determining which rate bands the income falls into that eligibility for marriage transfer can be met The transfer of 10% of one spouses personal allowance to the other isn't an allowance. Its a tax reduction. So it doesn't give an allowance or extend any of the rate bands.
Posted Mon, 14 Nov 2022 14:34:05 GMT by HMRC Admin 17

The Marriage Allowance would be removed if you reach the higher rate threshold.

Marriage Allowance is only available if you are a Basic Rate taxpayer only.

Thank you.

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