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Tax Tips - July 2017

Don’t miss out!

Are you getting all of your allowances? You may be missing out on extra tax allowances just because you haven’t been made aware of them. Most of you will be aware of the personal tax free allowance - £11,500 this year - which means that you only pay tax on the income you receive above this amount. But are you aware that there are other allowances that can be claimed if you meet certain criteria? We would like to make you aware of three allowances that are available to so many but not claimed. That’s right, you have to ask HMRC to apply these allowances; if you don’t, you won’t get them.

Marriage Allowance (MA)

This allowance started in the 2015/16 tax year.  It allows a couple who are married or in a civil partnership to transfer a specific amount of their unused tax free allowance to either their spouse or partner. The amount that can be transferred is 10% of the annual tax free allowance (£11,500) meaning that £1,150 can be transferred this year.  This can save up to £230 in tax and can be back dated to 2015/16.  It is important to remember that this transfer must be claimed by the spouse/partner who is giving up the allowance. The easiest way to claim is online at www.gov.uk/marriage-allowance, by telephone on 0300 200 3300 or by post to HM Revenue and Customs. BX9 1AS.

Married Couples Allowance (MCA)

This allowance benefits couples who are married or in a civil partnership where one of the married couple was born before 6th April 1935. It reduces the amount of tax you pay and in the current tax year it can be up to £844. It can only reduce your tax bill to zero so it won’t create a refund. The effect this year is the same as having an extra £4223 tax free allowance and if you claim it this is the figure you should look for in your tax code.  HMRC will usually allocate this extra allowance to the highest earner, but if it would better benefit the other spouse you can apply to HMRC for some or all of the allowance to be transferred using form 575.  You can also ask HMRC at the end of each tax year to transfer the surplus MCA if that is more beneficial.  Contact HMRC online at www.gov.uk/married-couples-allowance, by telephone on 0300 200 3300 or by post to HM Revenue and Customs. BX9 1AS.

Please note, a married couple who are old enough for the Married Couple’s Allowance cannot use the Marriage Allowance transfer as well.

Blind Persons Allowance (BPA)

This allowance is available when a tax payer is registered Severely Sight Impaired (SSI); remember, you don’t have to be completely blind. If your Ophthalmologist decides you are SSI and issues you with form CV1 you can contact your local authority to get registered with a number. You can then contact HMRC to claim the allowance. This year the allowance is £2,320.  If you can’t use the allowance because your income is too low you can transfer it to your spouse or civil partner, using form 575. Claiming BPA can save you paying £464 in tax this year.  In Scotland and Northern Ireland the process is slightly different. You need to be issued with a BP1 certificate in Scotland and an A655 in Northern Ireland. To claim this allowance contact HMRC, online at www.gov.uk/blind-persons-allowance, by telephone on 0300 200 3300 or by post to HM Revenue and Customs. BX9 1AS.

This article is by Tax Help for Older People registered charity no 1102276 (Scotland no SC045819), offering free tax advice to older people on incomes below £20,000 a year. The Helpline number is 0845 601 3321 or geographical 01308 488066.