The Lemon Fool

Following on from the confusion caused to Scottish taxpayers by the introduction of additional income tax bands coupled with the further divergence of the Higher Rate 'thresholds', has anyone got a definitive answer to where the cut-off limit will fall for transfer of Marriage Allowance in 2018/2019.

The Scottish basic rate limit is currently frozen at £43,000 and the dividend/savings limit at the rUK basic rate threshold at £45,000 with the Marriage Allowance cut-off at £43,000.
For 2018/2019 the Scottish basic rate limit is £24,000, the additional rate limit is £43,430 and the dividend/savings limit at the rUK basic rate threshold is £46,350.
Guidance sets the Marriage Allowance criterion variously as 'Basic Rate taxpayer' or 'Not a Higher Rate taxpayer' so one or other definition will need to change for 2018/2019.

This matters to me because for the first time since its introduction I stand to lose the Marriage Allowance owing to age (no more pension contributions), foresight(dividends/interest already sheltered) and domicile(ever-widening gap between starting rate for higher rate tax in Scotland and rUK.

John

They needed to pass Westminster legislation to sort this mess out; so this has now changed the cut-off definition to the "Scottish Higher Rate Threshold", which will become £43,430.

Thanks for the clarification, I will indeed break that rate limit and become a Scottish Higher Rate taxpayer.

Glad to pay a little more for my country but compared to a similar rUK taxpayer saving £390 @ 20% (£78.00), my £70 saving thanks to Westminster will be matched with a charge of £1190 @ 41% (£488) for the loss of the Marriage Allowance alone, in addition to a rate of 41% on any earnings falling within the band between £43,430 and £46350.

HMRC are currently estimating that I will pay an additional £595 tax next year but I fear this will rise somewhat once my expected CPI increases are applied to my pensions.

I fear many Scottish taxpayers will get a shock when they open their April pay packets.

John

teuchter66 wrote:I fear many Scottish taxpayers will get a shock when they open their April pay packets.John

I think most will be a bit better off, but a lot will take a hit as the workplace pension employee contributions go from 1% to 3% in April. Cynics might say it was an opportune moment to fiddle with Scottish Income Tax

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