Published On: Tue, Jul 16th, 2019

Tax code: Separating from your partner? You could overpay tax if you fail to inform HMRC | Personal Finance | Finance


The latter letter, N, conveys that this particular taxpayer has transferred 10 per cent of their Personal Allowance to their partner.

In this current tax year – which spans from April 6 to the following April 5 – the Marriage Allowance means that a partner can transfer up to £1,250 of their tax-free allowance to their husband, wife or civil partner – provided this significant other earns more.

According to the government website, this can reduce their tax payments by up to £250 over the course of the tax year.

The gov.uk website warns that a taxpayer should tell HMRC if certain circumstances in one’s personal life changes.

This includes if a person gets married or forms a civil partnership.

Additionally, should a person divorce, separate, or stop living with their spouse or partner, then HMRC may be required to be told.

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Gov.uk warns: “Tell HMRC straight away – if you do not, you could pay too much tax, or get a tax bill at the end of the year.”

This can be done online, should the taxpayer be paid a salary or pension through PAYE.

For people who also submit a Self Assessment tax return, logging the change online will mean their details are updated for both.

In order to do this, one will need their Government Gateway user ID and passwords, as well as their National Insurance number.

A taxpayer should also contact HMRC if their spouse of civil partner dies, reporting their death, as well as any changes to one’s own income following their death.

Income Tax is usually payable on taxable income above the Personal Allowance.

The rates of Income Tax are split into different bands, with each rate only applying to that portion of taxable income.

In 2019/20, the current tax rates stand at zero for the first £12,500 – or one’s Personal Allowance – of taxable income.

Any income between £12,501 and £50,000 is charged with a basic rate of tax – which is 20 per cent.

This rises to 40 per cent in the Higher Rate band, which covers taxable income from £50,001 to £150,000.

The Additional rate of tax is payable on taxable income greater than £150,000 – and this is 45 per cent.

It may be that some taxpayers with a large amount of taxable income lose all or part of their Personal Allowance.



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