PAYE13080 - coding: coding: general principles: married couples: date of marriage prior to 5 December 2005
There are special rules you need to follow when dealing with
a husband or wife.
Specific areas where you need to take care include
- Coding in the year of marriage
- Transferring surplus allowances between spouses
- Separation
- Death of a spouse
Many of the rules that cover the treatment of married couples
are given in the Independent Taxation (In) Handbook.
The remainder of this subject is presented as follows
Age related allowances
Coding for year of marriage
Death of either spouse
Form 18 elections
Jointly held assets
Married Couple's allowance
Provisional transfer of surplus allowances
Separation
Signals present when surplus allowances
transferred
Transferring allowances between spouses
Age related allowances
Full instructions are included at
PAYE10010 and at In410 onwards.
Note: Check if the wife is in an older age band
than the husband for age related allowance purposes. If she is,
review the age related allowances due to him. If reduced MAA or MAE
is due for CY (the year of marriage) or CY+1, use COP Function CD
to set the MCODE signal.
Coding for year of marriage
In the year of marriage the Married Couple's allowance due is reduced by one twelfth for each complete tax month before the date of marriage. When you have calculated the allowance due
- Enter the amount in the ALLCES field of COP Function CD
- Enter the date of marriage, in the SIGS etc field
- Check if any other allowances or deductions need changing as a result of the marriage, for example, a bereavement benefit may no longer be due on remarriage
Death of either spouse
The death of a person's spouse will be a very trying time for
them. You can help by being sympathetic and dealing with their tax
affairs as quickly and efficiently as you can.
The Independent Taxation Handbook explains the effect on
allowances in the year of death of either spouse. There is a
summary at In956 - 957. You will also find information on dealing
with deceased cases in the Assessment Procedures (AP) Manual at
AP4344 onwards.
From April 2001, bereavement benefits have been payable to
men and women. Details of these benefits are in the Employment
Income (EIM) Manual at EIM76170 onwards.
Form 18 elections
Where a valid election is received take the following action.
- Acknowledge the election on Form 18 (Acknowledgement). Address this to the wife if she has elected for half of the allowance or to the couple if it is a joint election
- Using the information on Form 18 or COP Function TI, advise the spouse's office of the election details
- Where this is a file case, file the election in the permanent notes folder
- Where this is not a file case, use COP Function NO to make an Historical Note on the taxpayer record to include
-
- Date of receipt of Form 18
- Whether the election is for half or the full amount of the allowance
- First year the election applies
- Date Form 18 (Acknowledgement) and notification to spouses office sent
Transferred allowances are entered using the abbreviations MAW and WMA. Remember that
- Except in the year of marriage, the only permitted entries are one half or the whole of the minimum of the Married Couple's allowance for the year
- For the year of marriage, you may enter one half or the whole of the reduced Married Couple's allowance due only if the date of marriage is held on the record. At the same time you should enter the correct amount for CY+1
- The amounts in the CY coding will be carried forward to CY+1 unless you enter a different amount
The presence of the PENAL signal does not prevent the granting
of any allowance and neither MAA / MAE nor WMA should be withheld
because a targeted review form, or the information asked on it, is
outstanding.
Even if a Form 18 election is in force, either spouse can
still transfer to the other spouse any surplus MAA or MAE. The
Independent Taxation Handbook gives the detailed rules at In496
with examples at In510. Usually the notice will be given after the
end of the year, when details of income are known.
Surplus Married Couple's allowance transferred to the wife is
included in coding by entering WAA or WAE followed by the amount.
Blind Person's allowance is entered using BPR.
Whenever a transfer of allowances is made there are certain
signals that need to be set to make sure the case is reviewed.
Further information is given at
PAYE13082.
A Form 18 election cannot be withdrawn in-year even if the
couple has separated
Jointly held assets
Married couples often have investments and bank accounts held in
their joint names. Often it is hard to decide how to split the
income between them. The general rule is that jointly held assets
are split equally between spouses.
In certain circumstances they can ask to be taxed on their
actual entitlement to income from the joint asset. To do this they
need to make a `declaration'. They can do this on form 17 and you
should issue this form if appropriate.
Make sure you advise the other spouse's office of any
decisions you make. Full instructions on dealing with this type of
income are at In115 onwards.
Married Couple's allowance
A man (but not a woman unless an election has been made for 2006-2007 onwards, see below) can claim the Married Couple's allowance for a year of assessment, if in that year
- He is married
And
- His wife lives with him
And
- At least one of the spouses was born before 6 April 1935
For a couple who married before 5th December 2005, the husband
will continue to receive married couple’s allowance. From tax
year 2006-07 couples who married before 5 December 2005 will be
able to elect instead for the spouse with the higher income to
claim married couple’s allowance under the new rules. This
rule change provides existing claimants with increased options.
There is no financial advantage to be gained from this. Indeed it
is possible the couple may reduce their overall entitlement to
married couple’s allowance if the wife has a higher income
and exceeds the age related income limit.
Under the old rules it is still the husband's NSI that
determines if there is any reduction in the age-related level of
this allowance even if part or all of the minimum amount of the
allowance has been transferred to his wife.
An election for the new rules to apply from 2006/07 or later
years, once made, cannot be revoked. An election must be made
before the start of the first year for which it is to apply.
From 5th December 2005, civil partners will have similar
rights and married couple’s allowance will be available to
married couples and civil partners. From that date civil
partnerships, and also new marriages, meeting the age criteria
will, on claim from the spouse or civil partner with the higher
income, receive the allowance. See
PAYE13085.
Provisional transfer of surplus allowances
A husband's main source office may sometimes provisionally
transfer a surplus of allowances to the wife's office.
In these cases
- The main source office must confirm the figure each year
- The wife's office must only continue a provisional transfer of surplus allowances if they have permission from the main source office
They are shown on the coding screen for
- The husband's record as MAT
- The wife's record as WAA or WAE
Separation
The breakdown of a marriage is likely to be a difficult time for
both the husband and the wife. Try to sort out the taxation
problems connected with it as quickly and sympathetically as you
can.
When a couple first separate you will need to find out the
facts such as, when they separated and new addresses. In some cases
you may also need to establish, who has responsibility for any
children or maintenance arrangements. If you do not have the
information you should send a letter if necessary.
The Relief Instructions (RE) Manual give full instructions at
RE1040 onwards. Also the Independent Taxation Handbook gives a
summary of the effect on allowances in the year of separation at
In953.
Signals present when surplus allowances transferred
MAT set on a married man’s record when
Married Couple's allowance is transferred to the wife, means that
the husband will get a Form 575 (T) each year.
POTA set when a wife has no record and her Blind
Person's allowance is transferred to her husband. Add an Essential
Note `POTA WIFE'S BPR IN CODE'.
MCODE set where a husband's Blind Person's
allowance is transferred to his wife. Add an Essential Note `MCODE
BPR TRANSFERRED TO WIFE'.
MCODE set where a wife's code includes her
husband's Blind Person's allowance and NRH is set. Add an Essential
Note `MCODE HUSBAND'S BPR IN CODE'.
MCODE and POTA set where a wife's Blind Person's
allowance is transferred to her husband. Add an Essential Note
`MCODE/ POTA BPR TRANSFERRED TO HUSBAND'.
575HUS and NRH set where a wife's code includes
her husband's Married Couple's allowance and he has no record,
means that the husband will get a form 575 (T) each year.
Transferring allowances between spouses
In certain circumstances you can transfer allowances between the
spouses.
To the wife from the husband
An election can be made for the wife to receive one half, or
the whole, of the basic Married Couple's allowance. This is
regardless of the level of the husband's income. However, the age
related additions cannot be transferred.
An election is made on Form 18 and remains in force until
amended or withdrawn. The Independent Taxation Handbook gives full
instructions at In470 onwards.
Any surplus of the Married Couple's allowance or husband's
Blind Person's allowance which is unused, because the husbands
income is too low, can be transferred to the wife if the husband
gives notice that he wants to do this. Form 575 is the designated
form for giving notice. However it is not compulsory and a letter
can be accepted. Full instructions are given at
- In480 onwards for transfer of Married Couple's allowance
- In690 onwards for transfer of Blind Person's allowance
From the wife to the husband
Any surplus of the wife's share of Married Couple's
allowance, transferred through an election on Form 18, but which is
unused because her income is too low, can be given back to the
husband.
Any surplus of the wife's Blind Person's allowance unused
because her income is too low, can be transferred to the
husband.
