There is a mistake in HMRC’s calculation for a number of tax payers with incoming Marriage Allowance Transfers.
HMRC have stated the following:
HMRC Exclusion 105
For most customers MAT_IN is retained and the SA tax calculator correctly re-allocates reliefs and allowances to be
able to do so. However, for customers who have dividend income that is in the nil band that would otherwise be
taxable at both basic rate and higher rate the Marriage Allowance transfer amount of £238.00 (£1,190 x 20%) is not
retained when the calculator should be allocating allowances to reduce dividend income in that would be in the basic
and higher rate band were it not for the dividend allowance nil band.
An example is a customer with MAT_IN, Employment (EMP1) £50,495, Savings (INC2) £45, Dividends (INC4) £997 and
Gift Aid £4,145 (£5,945 gross). The MAT_IN is disallowed and the SA tax calculator sets PA £11,850 against non-savings.
The liability is £7,729.00. By setting PA £997 against the dividend income MAT_IN is retained and the liability is
£7,690.40, a difference of £38.60.
Note that for MAT_IN to be retained there can be no dividend income in the higher rate or in the higher rate nil band.
However, there can be savings income in the higher rate nil band (but none in the higher rate). In this example there is
£5 in the higher rate nil band.
The number of customers affected is tbc
The maximum a customer will have overpaid as a result of this is MAT_IN £1,190 x 20% £238.00 minus amount of PA re-
allocated to dividends x 20%. In this example that is £238.00 minus £199.40 (£997 x 20%) = £38.60.In these circumstances a paper return should be filed.
The Ftax SA100 identifies and alerts customers affected when you click Calculate. If you are affected it is recommended that you file a paper return.