Combined Income, Tax and Allowance Confusion

Hi, I apologies in advance as this is a bit of a long one. Wondering if someone could explain how tax is calculated with two incomes that take you into the higher tax rate. I have two incomes, one from my current employment, £40k, and one from a pension from a previous employment, £15.6k. It’s the first time I’ve had combined incomes high enough to exceed the 20% threshold so unsure how it’s worked out. About 2 years ago my wife transferred £1,260 of her tax free allowance to me when my total combined income was below £50k, taking my tax free allowance to £13830, and reducing hers to £11,310. Tax year 23/24 I exceeded the threshold by about £200, but I had been taxed just over £200 extra in one month by mistake, when I called HMRC to query it and resolve the issue I was asked if I wanted it to be returned the following month, or leave it on my account to cover any tax at 40% I may have to pay, as it looked like I would exceed the threshold by around £300, I asked for it to be held to cover any extra, so technically I’m expecting a small rebate. Since starting this employment I have had pay rises that have increased my combined income to where it obviously exceeds the 20% threshold by a fair amount. I wanted my tax free allowance transferring from my pension to my salary, and was initially expecting my tax free allowance to remain at £13,830, but when I called and made the request my tax free allowance was reduced to £9,760, I asked why, and was told the allowance my wife transferred cannot be used as I earn above £50k, but it would be used to increase my 20% threshold to £51,590, so I'll pay 40% on anything from £55,591, but I can’t find reference to that anywhere. My wife’s tax free allowance is still showing as £11,310, so she hasn’t had the £1,260 transfer returned to her free allowance. During that call the HMRC Rep said my tax free allowance has been reduced to ensure I pay tax on the amount my combined income exceeds the threshold at 40% from my salary, as pensions can only be taxed at BR, which I understand, they said I'm going over the threshold by just over £4k. But I can’t work out why my tax free allowance has been reduced by £2,810 if the 40% tax due on the amount I pay tax at the higher rate is £4,009, tax equates to £1603.60. Why wasn't my tax free allowance reduced to £10,966, rather than £9760? I thought regardless of income your tax free allowance always remains the same, and 20% is taken from the figure from your free allowance, up to the threshold, and then 40% is taken from anything above that amount. Any help someone can give that will help me understand it would be greatly appreciated. Thanks

Hi OxyJon,
If you are a higher rate tax payer then you will no longer be eligible for the marriage allowance transfer.
With your 2 sources of income it will take you into the higher rate.
At your 2nd source of income some of the tax will be due at the 40% rather than 20%.
Your 2nd source will be taxed at the BR, basic rate, code deducting tax at 20%.
As some tax due at 40% there will be a deduction in your main tax code to collect the tax at 40%.
As you are still paying tax at 20% at your main source the deduction in your code will be collect tax at 20%.
If you want to check your tax code is correct you can contact HMRC:
Income Tax: general enquiries
Thank you. 

Hi, Can someone explain to me what is the reason behind the deduction? Until 4th November 2024 I was working 2 Jobs so my tax was calculated based on main and secondary employment and the Tax code was different for both Jobs but after 4th November 2024 I am only working one job but my tax code is not is the same The BR one so my tax is still getting deducted. what is the reason behind this?

Hi,
You should contact our Income Tax team, to ensure that the correct tax codes are being applied.
Income Tax: general enquiries
Thank you.