Personal Allowance & Starting Rate for Savings

If i am in receipt of the Marriage Allowance can I use it to add to my Personal Allowance to start the calculation when earning £15,000 which allows me to have an extra £5000 Starting Rate for savings for the calculation. 12570 + 1260 = 13830- 15000 = 1170 - 5000 = 3830 Or 12570 - 15000 = 2430 -5000 = 2570 My question is can i use the Marriage Allowance for this calculation or not if I am in receipt of it? My second question does my wife have to deduct the Marriage Allowance she has given me from her Personal Allowance to calculate hers?

No, receipt of Marriage Allowance entitles you to a fixed tax deduction off your overall income tax liability, not any extra allowances. If your non savings non dividend income is £15,000 then the savings starter rate available will be £2,570. Once that has been used you can start to use the savings nil rate (aka Personal Savings Allowance). Your tax liability will be reduced by £252 from the Marriage Allowance tax deduction (£1,260 x 20%). It is different for your wife, by applying for Marriage Allowance she has a reduced Personal Allowance of £11,310.

Thanks I think I have understood that, so basically if in receipt of marriage allowance it is only used against paid income not the calculation for the savings starting rate. Seems crazy when you transfer an allowance you then can’t use it for the purpose of calculating your savings interest when on a low income you don’t gain much. Am I correct with my wife earning under 12570 (Now 11310) if her paid income and savings income come to more than 11310 she can still use the 5000 starting rate as well. How do you calculate that. Thanks for your help

Hi confusedlady,

You are correct, your wife would have Personal Allowance 11310 and the Starter Rate would add onto that up to £5,000.

Thank you.