Using your Inheritance Tax (known as IHT) annual allowance or…
The new tax year saw a range of updated allowances, including the Marriage Allowance which has been around since 2015. The Marriage Allowance enables you to transfer part of your personal tax allowance to your spouse or civil partner. This is a useful tax break which allows use of part of an allowance which would otherwise be lost.
To qualify , you need to be either married or in a civil partnership. One needs to be a non-taxpayer and the other needs an income of less than £46,350 p.a. gross (in other words they cannot be a higher or additional rate taxpayer). For the 2018/19 tax year, the personal allowance is £11,850 and the transferable marriage tax allowance is £1,190. You can backdate your marriage allowance claim to any tax year since 5th April, 2015. In 2015-16 the allowance was worth £232 in tax and moving forward to 2018/19 it is worth £238. If you are eligible for the allowance since it began then backdating could be worth £900. This can be very useful for those in retirement.
On another note, those of you who have set up a lasting power of attorney may be due a refund.
You can get part of your application fee back if you applied to register a power of attorney from 01/04/2013 to 31/03/2017. You must make a claim before 31st January, 2021. The refund must be paid to the donor and the amount of refund will depend on when you paid the fee. The reason for the refund is that between 2013 and 2017, the operating costs of the Office of the Public Guardian decreased, but the fee stayed the same (at £110). Since the fee is only meant to cover operating costs the government is now repaying the difference between what should have been paid and what was paid. There is also a small interest payment on the refund.
To claim your refund you need to claim online www.gov.uk or phone the office of the Public Guardian’s hemline on 0300 456 0300.
Lasting power of attorney is particularly important if you have a drawdown plan. Drawdown, unlike an annuity, for example, requires the retiree to be able to manage their financial affairs throughout retirement . If you suffer physical ill health or a lack of mental capacity you may be unable to manage your financial affairs including drawdown decisions. Lasting Powers of Attorney (LPA) allows a person to appoint a third party to make decisions on a range of matters including their finances in the case of incapacity. Without a LPA a third party would not be able to make the financial decisions which would be needed when using a drawdown plan. Therefore, ensuring that an LPA is in place is extremely important for those in drawdown.
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