PAYE13085 - coding: coding: general principles: married couples and civil partners: date of marriage or civil partnership on or after 5 December 2005
The Civil Partnership Act 2004 came into effect on 5 December
2005. The Act allows same sex couples to form a legally recognised
civil partnership with the same rights and responsibilities as
those enjoyed by opposite sex couples who choose to marry. A civil
partnership must be legally registered under the Civil Partnership
Act 2004.
For marriages occurring before 5 December 2005 we gave the
married couple's allowance in the first instance to the husband
where either he or his wife were born before 6 April 1935.
For new marriages and civil partnerships formed on or after 5
December 2005 the married couple’s allowance is given to the
spouse or civil partner who has the higher income and the spouse or
civil partner were born before 6 April 1935.
We will continue to call the allowance Married Couple’s
Allowance but the coding descriptor will be MCCP.
Note: You
must not use the term 'MCCP' in correspondence or
when you are speaking to a taxpayer or their agent. You
must always refer to the 'Married Couple's
allowance' when you are dealing with taxpayers and their agents.
Cases must be dealt with manually and the MCODE signal set.
Specific areas where you need to take care include
- Coding in the year of marriage or civil partnership
- Transferring surplus allowances between married couples and civil partners
- Separation
- Death of a spouse or civil partner
The remainder of this subject is presented as follows
Age related allowances
Coding for year of marriage or civil partnership
Death of either spouse or civil partner
Form 18 elections
Jointly held assets
Married Couple’s Allowance
POTA signal
Provisional transfer of surplus allowances
Separation
Signals present when surplus allowances
transferred
Transferring allowances between spouse or civil
partner
Age related allowances
Full instructions are included at
PAYE10010 and at In410 onwards.
Note: Check if the spouse or civil partner of the
highest earner is in an older age band for age related allowance
purposes. If they are, you must review the age related allowances
that are due to the highest earner.
Coding for year of marriage or civil partnership
In the year of marriage or civil partnership the Married Couple’s Allowance (MCCP) is reduced by one twelfth for each complete tax month before the date of marriage or civil partnership. When you have calculated the allowance due
- Enter the amount of MCCP in the ALLCES field of COP Function CD
- Enter SDOB for the spouse / civil partner
(MCCP can only be entered where both DOB and SDOB are present)
- Enter the date of marriage / civil partnership (DOM) in the SIGS field
Check if any other allowances or deductions need changing as a
result of the marriage or civil partnership, for example, a
bereavement benefit may no longer be due on remarriage or civil
partnership.
MCCP will not be automatically reduced when ESTINC is entered
on the coding record, you will need to manually calculate any
income reduced age related allowances and will need to remember
that MCCP may require recalculation if the ESTINC is amended. In
the first year of marriage any reduction in the amount of PAA or
PAE because of their level of income also needs to be calculated
manually.
Death of either spouse or civil partner
The death of a person’s spouse or civil partner 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 Manual explains the effect on
allowances in the year of death of either spouse or civil partner.
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 spouse or civil partner who has elected for half of the allowance or to the couple if it is a joint election
- Using the information on Form 18 or in COP Function TI, advise the office dealing with the tax affairs of the spouse or civil partner who had the full allowance of the election
- 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 spouse or civil partners office sent
Transferred allowances are entered using the abbreviation MCCP. 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 only enter one half or the whole of the reduced Married Couple’s allowance due if the date of marriage or civil partnership is held on record, and the dates of birth of both spouse or civil partners are present. 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 MCCP should not 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 or
civil partner can still transfer to the other spouse or civil
partner any surplus MCCP. The Independent Taxation Manual 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 that is transferred
to a partner is included in coding by entering MCCP 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
PAYE13088. A Form 18 election cannot be
withdrawn in-year even if the couple have separated.
Jointly held assets
Married couples and civil partners 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 couples / civil
partners.
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 that you advise the other spouse's or civil
partner’s office of any decisions that you make. Full
instructions on dealing with this type of income are at In115
onwards.
Married Couple’s allowance
From 5 December 2005 the highest earner of the married couple or civil partnership can claim the Married Couple’s allowance (MCCP) for a year of assessment, if in that year
- They are married or have formed a civil partnership by registration
And
- The date of marriage or civil partnership is on or after 5 December 2005
And
- Their spouse or civil partner lives with them
And
- At least one of the couple / civil partner was born before 6 April 1935
POTA Signal
POTA is set when the lower earner of the married couple or civil
partnership has no record and the Blind Person’s Allowance is
transferred to the highest earner. Add an Essential note
‘POTA SPOUSE/CIVIL PARTNERS’* BPR IN CODE’.
*delete as appropriate
Provisional transfer of surplus allowances
The main source office of the highest earner may sometimes
transfer a surplus of allowances to the other spouse or civil
partner.
In these cases
- The main source office must confirm the figure each year
- The office of the spouse or civil partner must only continue a provisional transfer of surplus allowances if they have permission from the main source office
The MCCP in the highest earner’s coding will be reduced to the amount required and the balance of the MCCP will be transferred to the spouse or civil partners code.
Separation
The breakdown of a marriage or civil partnership is likely to be
a difficult time for either spouses or civil partners. Try to sort
out the taxation problems connected with it as quickly and
sympathetically as you can.
When a married couple or civil partners 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 gives full instructions
at RE1040 onwards. Also the Independent Taxation Manual gives a
summary of the effect on allowances in the year of separation at
In953.
Signals present when surplus allowances transferred
POTA set when the lowest earner spouse or civil partner has no
record and the Blind Person's allowance is transferred to the
highest earner spouse or civil partner. Add an Essential Note
‘POTA WIFE’S/HUSBAND’S BPR IN CODE’ or
CIVIL PARTNERS’* BPR IN CODE.
*delete as appropriate
MCODE set in all cases when MCCP present. The Blind Person's
allowance can be transferred between the spouses / civil partners,
an appropriate essential note must be added to the record for
example
| 'MCODE BPR TRANSFERRED TO WIFE' | A husband's Blind Person's allowance is transferred to his wife |
| 'MCODE HUSBAND'S BPR IN CODE' | A wife's code includes her husband's Blind Person's allowance and NRH is set |
| 'MCODE/ POTA BPR TRANSFERRED TO HUSBAND' | A wife's Blind Person's allowance is transferred to her husband |
| 'MCODE BPR TRANSFERRED TO CIVIL PARTNER' | A civil partner's code includes the other civil partner's Blind Person's allowance |
| 'MCODE CIVIL PARTNER'S BPR IN CODE' | A civil partner's code includes the other civil partner's Blind Person's allowance |
Transferring allowances between spouses or civil partners
In certain circumstances you can transfer allowances between the
spouses or civil partners.
An election can be made for the spouse / civil partner to
receive one half, or the whole, of the basic Married Couple's
allowance (MCCP). This is regardless of the level of the
spouse’s / civil partner'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 (MCCP) which is
unused, because their income is too low, can be transferred to the
spouse / civil partner if the other spouse / civil partner gives
notice that they want 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 in the Independent Taxation
Handbook at
- In480 onwards for transfer of Married Couple's allowance
- In690 onwards for transfer of Blind Person's allowance
