Marriage Tax Allowance Claims – Couple’s Can Claim Back £1,000’s

Marriage Tax Allowance Claims – Could You Cut £900 From Your Tax Bill This Year?

If you’ve never claimed the marriage tax allowance the back pay could leave you almost £1,000 better off this year. Here’s how:

According to HMRC figures and a BBC report, there were just over 4 million couples in the UK (either married of in civil partnerships) who could have claimed the ‘marriage allowance’ last year.

Yet, since it launched in 2015, only 2.2 million have done. So if you’re one of the people who hasn’t looked into it because you don’t know about it or you assume you won’t be eligible, it’s time to take a closer look.

What Is The Married Couple’s Allowance?

One of the longest standing and biggest financial frustrations of being in a partnership is when one of you earns less than the current personal tax allowance threshold, but you can’t transfer any of that surplus allowance to your partner.

But in 2015 there was a change. From 2015 onwards, you’ve been able to take 10% of your tax allowance and give it to your spouse/partner in a marriage allowance transfer.

Married Person’s Tax Allowance – An Example

Suppose you’re a teaching assistant. You earn about £9,000 a year, but the personal tax allowance 2017/2018 was £11,500. So that’s £2,500 extra you could have earned tax free, but you didn’t because your wages just aren’t that high.

Until 2015, you’d have lost all the benefit of that £2,500 of personal tax allowance.

Now, you can transfer up to 10% of tax allowance to your partner, providing you haven’t used it.

So in this case, you’d be able to give your partner £1,150 of your tax allowance. That means they wouldn’t have to pay tax on an extra £1,150 of income, over and above their own existing personal tax allowance. That would be worth £230.

Do We Qualify?

As you might expect, there are a few conditions to claiming these marriage tax benefits:

  • You must be married or in a civil partnership. If you’re ‘unofficially’ living together – even if you’ve been living together for decades – you won’t qualify for the HMRC marriage allowance
  • One of you needs to be earning less than the current tax allowance threshold
  • The other needs to be paying tax at 20%. If you’re in a higher tax bracket, you won’t be eligible for the married couple’s tax allowance
  • It doesn’t matter whether you are employed or self-employed

 

If The Marriage Tax Allowance Was Worth £230 Last Year, Where Does The £900 Figure Come From?

The great thing about the HMRC marriage allowance is you can backdate it to 2015, or as far back as you meet the criteria.

Obviously, you’ll need to have been in a marriage or civil partnership from the point you claim, and you’ll also need to have satisfied the income requirements each year since then to claim the full backdated amount.

Each year, the personal allowance changes, so the amount you could have claimed has changed too. In 2015 it was worth £212. The personal tax allowance 2016-2017 was £11,000, so the marriage allowance was worth £220, then £230 and in 2018 its value rises to £238.

Add those together and you reach a total in excess of £900.

As long as one of you continues to earn less than the personal tax allowance and the other remains below the higher tax bracket, you’ll continue to benefit from a £200+ marriage tax boost each year.

It’s also worth remembering that the married couple’s tax allowance can be backdated even if your partner has died since 2015.

How Do We Apply?

This part’s crucial: the person who needs to apply is the lowest earner (i.e. the person transferring part of their personal tax allowance).

You can apply online and it’s a simple process: you’ll just need the National Insurance numbers for you and your partner, and proof of identity.

Once you have submitted your application you’ll get an email to confirm your application has been received and another to confirm the HMRC’s decision.

As long as you remain eligible for the marriage tax allowance, you’ll continue to have 10% of your tax allowance transferred to your partner each year.

What If I Earn Less Than My Tax Allowance, But Not 10% Less?

A curious quirk of the marriage allowance transfer rules means that you can transfer all of it, or none of it, but you can’t transfer a part of it. Even so, it may still be worthwhile doing even if your wages creep over the threshold.

Let’s go back to our teaching assistant, who this year is working a few extra hours and has had a pay rise to boot, bringing earnings to £11,000. The personal tax allowance this year is £11,850, and once again 10% of it is transferable.

£11,850 – £1,185 (10%) leaves a new personal tax allowance for this year of £10,665, so there’s now a gap of £335 between earnings and personal allowance. That amount will be taxable, and at 20% that will mean tax deductions of £67.

The benefit to the partner, however, is £238 and you don’t have to be a maths whizz to work out that on that basis the marriage couples’ allowance is something that’s still very much worth doing.

What Happens If My Wage Fluctuates Month To Month?

The key calculation is the amount you and your partner earn in a year. So if you do some extra shifts that give you a bumper month it doesn’t matter as long as the total for the year remains below the tax allowance threshold.

Similarly, as long as you remain within the 20% tax bracket for the year, it doesn’t matter that, for a couple of months, you earned what would otherwise be a higher tax rate income.

Naturally, neither you nor HMRC will know for sure how much you and your partner have earned in a year until the year is done. If it turns out that you owe HMRC money, they’ll recover it through self-assessment or payroll.

If you’ve not considered applying for married couples tax allowance before and you think you might qualify, do it now. It could save you hundreds of pounds.

What is a Business Insurance?

A business insurance is necessary if you run a company of your own, and you could be violating the law without it. Here is a guide on how business insurance works.

How does it work?

If you experience financial loss while carrying out your business activities, it can pay out a cover for:

Employment disputesStock
Legal expensesEquipment
Professional indemnityProperty damage
Public liabilityTools and machinery

It decreases uncertainty since your business can continue to operate if something goes wrong.

You can avail basic policies that are designed for self-employed tradesmen or professionals; or more comprehensive cover for bigger companies and franchises.

Think about what your business requires and try to look for a package policy that can cover everything. You can look for a policy by:

  • Going directly to an insurer
  • Using an online comparison
  • Discussing your needs with a broker

What types are there?

The different types of insurance that safeguard your liability as a business include:

  • Employers’ liability: Pays out if you need to compensate your employees, if they die or if they are injured as a consequence of working for you.
  • Public and product liability: Pays out if a third party or their property is damaged or injured because of your business activities.
  • Professional indemnity: Pays out if a client accuses you of damages that result from your professional advice (e.g. if you are an accountant or a solicitor).
  • Legal expenses: Covers legal fees for court proceedings including tax disputes with HMRC, or employment tribunals.

The types of insurance that safeguard your commercial premises and its contents include:

  • Business interruption: Covers any financial losses that you experience as a result of not being able to trade, due to property damage. For example, if your store is flooded.
  • Commercial property cover: Covers damage to your building, contents and any stock that your business owns.
  • Goods in transit: Covers damage, theft, or loss of your business property while it is being transferred from one place to another.

You can avail package policies that allow you to combine various types of business insurance, and you can choose to cover more than one business on a policy.

Do you need it?

According to the law, you need to have certain types of business insurance. For example, if you employ voluntary or paid staff, you must have an employers’ liability insurance policy.

There are also some professions where it is mandatory for you to have a professional indemnity insurance, like insurance brokers and financial advisers.

Other types of business insurance are voluntary, but you should examine property cover if you have a mortgage or long-term lease on commercial premises.

How much does it cost?

The price you pay for business insurance will depend on:

  • Your annual turnover
  • The type of business you run
  • The size of your premises
  • How many employees you have
  • The level of cover you need

Once you have determined what cover your business demands, shop around and compare quotes to discover the most competitive policy.

How to make a claim

If you wish to claim on your business insurance, immediately contact your insurer and give them as much information as possible.

Most business insurers run a 24-hour claims helpline. However, they may wish to visit you before they settle your claim to discuss the matter in detail.

Mis-sold Mortgage Claims

For most people, taking out a mortgage is likely to be the biggest financial commitment they will make.

It’s not surprising then that giving mortgage advice became regulated by the Financial Services Authority (FSA), which is now regulated by the Financial Conduct Authority (FCA) in October 2004. Since then mortgage advisers have had to ensure that the advice they provide is suitable.

This includes whether you, as the customer can afford the mortgage, whether it meets your needs and whether it is the most suitable from all the mortgages that the adviser can access.

Unfortunately, there’s a lot of evidence to show that many people have not received the most suitable advice. People can receive incorrect or misleading mortgage advice in a number of ways and if you have been mis-sold a mortgage or mortgage-related product then we may be able to help.

The FSA (Financial Services Authority) paper, ‘Mortgage Market Review: Responsible Lending’, released in July 2010, identified mortgage mis-selling as a real issue that came to a head in the run up to the recession.

While millions of people have mortgages that they are very happy with, a significant number have been left in desperate situations following poor lending by mortgage companies. As such, many borrowers are struggling to meet their repayments and are facing significant arrears and even repossession.

So how did this happen? It appears that, in response to a rising number of mortgage complaints, the FSA found that brokers and lenders have been breaking the rules and lending money to vulnerable people who are not able to service their debt.

What Are The Ways In Which My Mortgage May Have Been Mis-sold?

The adviser didn’t take account of changes in interest rates and how these might affect you.

For example, if you took out a fixed rate mortgage, your payments will have been set at a fixed amount for a period. Once the fixed rate ended, your payments will have changed to the standard rate that was offered by the lender. In many cases, this will have meant that your payments would have increased substantially.

If the adviser didn’t assess the likely increases you could face and whether you would be able to afford them, your mortgage may have been mis-sold.

Your adviser was required to take account of any known changes in your circumstances.

For example, let’s assume that you took out a mortgage at age 45 for 25 years. If you are going to retire at age 65 this means that you will still have another 5 years left on your mortgage. The adviser should have established how you will be able to continue to afford the mortgage after you retire.

If you undertook a re-mortgage to repay your existing debts, then your adviser should have considered the costs that would be incurred because of lengthening the period of your debt and the implications of making a loan that was unsecured become secured against your home.

For example, you have a car loan that has 3 years left to run and you re-mortgaged to repay this loan. Whilst re-mortgaging probably reduced the amount you had to pay each month, it also means that you are really repaying the loan over the term of your mortgage, which could be 20 or 25 years.

You’re also going to be paying interest over this longer period. All in all you’ll usually be paying more in the long run.

The adviser sold a “sub-prime” mortgage where you could have obtained a “high street” mortgage.

A sub-prime mortgage may be offered where your credit rating is poor or shows that you have experienced difficulties with payments in the past. However, it may also be offered if your income is below the level that a mainstream lender will accept, or you require a particularly high loan against the value of your property (LTV).

Sub-prime mortgages usually have higher interest rates. Therefore, if you did not fit into one of the above categories then you may have been mis-sold if the adviser arranged a sub-prime mortgage for you.

The adviser arranged a self-certification mortgage for you even though you were employed and had proof of your income.

A self-certification mortgage is one where you generally do not have to provide evidence of your income to the lender. As a result, the lender takes more risk in lending to you and therefore charges a higher rate of interest. If you didn’t need a self-certification mortgage but were advised to take one, you may have been mis-sold.

Another concern around self-certification mortgages is that some advisers have encouraged borrowers to inflate their income to enable them to get a mortgage in cases where their income would otherwise be too low. This is called mortgage fraud.

The adviser should also have assessed whether you preferred an “interest-only” mortgage or a “capital and interest” mortgage.

A “capital and interest” mortgage is ideal for borrowers that don’t want to run the risk of having money left to pay on their mortgage at the end of the term. This is because you repay interest on the mortgage as well as an element of capital back to the lender with every payment. The lender works out what you need to repay each month to do this and so if you don’t miss any payments, the mortgage will be paid off.

In contrast to this, an “interest-only” mortgage is exactly what it says. You only pay interest on the outstanding mortgage to the lender. This means that you must find another way of repaying the actual debt, by using what’s called an “investment vehicle”.

Common products used are endowments, an ISA, a unit trust, or even a pension. Whilst an interest-only mortgage usually means that you pay lower amounts each month it does carry the risk that the investment vehicle you use is not guaranteed to repay the mortgage at the end of the term.

Therefore, your adviser should have discussed with you whether you were prepared to take this risk.

I took my mortgage out directly with a lender – do the same principles apply?

Yes, if your lender gave you advice about the suitability of a mortgage, then it was also required to comply with the same principles and rules.

How To Spot Signs Of Mortgage Mis Selling

There are various ways in which mortgages have been mis-sold. These include:

  • Interest Only Mortgages

Although these seem to be a cheaper option in the short-term, you will end up paying significantly more in the long-run. This should have been explained to you by your broker or lender. They should have also given examples of the cost of a Capital and Repayment mortgages and explained to you that you may have to switch your mortgage to a Repayment mortgage at some stage.

  • Repayment Investments (Such As Endowment Policies)

Such investments are designed to pay off the mortgage when it is finished however there are cases when they fall short and a further lump sum is required.

  • Debt Consolidation

If you were advised to move all your loans and credit cards etc. onto your mortgage but were not informed that, although your monthly outgoings would be initially lower you would be lengthening the term of your debt and increasing the interest, this is a form of mortgage mis-selling.

  • Affordability

Was your household budget assessed along with your income and various outgoings, therefore working out your ‘disposable income’? It should have been – if it wasn’t then you may well have been sold a product you couldn’t afford.

  • Self-Certification

You may have been encouraged to take out a ‘Self Cert’ or ‘Fast Track’ mortgage – popular with brokers due to their high commission – despite being able to prove your income with through payslips or audited accounts.

  • Your Mortgage Post-Retirement

Do you know if your mortgage will run past your retirement? If so, do you know how you will meet the repayments?

  • Right To Buy Mortgages

Under the ‘Right to Buy’ scheme, many people have been unaware that their mortgage payment would be much higher than their rent, that they would become responsible for maintenance costs and that they would lose their Housing Benefit.

  • ‘Sub Prime’ Mortgages

These mortgages, which cost more than those on the high street, are recommended for borrowers who have a poor credit history, CCJ’s or low credit score. You may well have been advised to purchase one even if your credit rating was fine.

  • High Broker Fees

Did you pay an unreasonably high fee to your broker? Did you know how much it would be or was it added to your mortgage without you knowing thus meaning you are paying interest on it?