Two million couples are not taking full advantage of the Marriage Allowance. This form of tax relief allows you to transfer 10%, currently £1,260, of your personal allowance to your husband, wife or civil partner, which could save you up to £252 in tax each tax year you qualify. It only takes around ten minutes to apply and it won’t cost you anything.
You can usually claim for the previous four tax years, if you qualified during that time. At the time of writing (August 2021), you can backdate the claim to the 2017/18 tax year.
To benefit, one of you must have an income of £12,570 or less. Your spouse or civil partner must have an income between £12,571 and £50,270 for you to be eligible.
How it Works
Marriage allowance works by reducing the non-taxpayer’s personal allowance by 10% (£1,260) and increasing the basic rate taxpayer’s personal allowance by the same amount. This means that more of the basic rate taxpayer’s income won’t be subject to income tax.
It is worth noting that if the non-taxpayer is just below the personal allowance, they could end up paying tax once the 10% has been transferred. It doesn’t mean you will be worse off; it just means you might not save the maximum of £252 each tax year.
Who isn’t Eligible
You cannot claim Marriage Allowance if you’re living together but you’re not married or in a civil partnership.
You won’t be eligible for marriage allowance and married couple’s allowance (MCA) at the same time. MCA is only applicable if one of you was born before 06/04/1935. You can learn more about MCA at https://www.gov.uk/married-couples-allowance
Your income is £11,500 and your Personal Allowance is £12,570, so you do not pay tax.
Your partner’s income is £20,000 and their Personal Allowance is £12,570, so they pay tax on £7,430 (their ‘taxable income’). This means as a couple you are paying Income Tax on £7,430.
When you claim Marriage Allowance you transfer £1,260 of your Personal Allowance to your partner. Your Personal Allowance becomes £11,310 and your partner gets a ‘tax credit’ on £1,260 of their taxable income.
This means you will now pay tax on £190, but your partner will only pay tax on £6,170. As a couple you will benefit because you are only paying Income Tax on £6,360 rather than £7,430, which saves you £214 in tax.
*The above example was provided at https://www.gov.uk/marriage-allowance
How to Apply
It is the non-taxpayer that needs to apply for marriage allowance to transfer 10% of their personal allowance to their partner. You can apply using the government gateway link below:
You’ll also need any two of the following when you apply:
- One of your 3 most recent payslips
- UK passport details
- Credit information (such as loans, credit cards or mortgages)
- Self Assessment tax return details (in the last 3 years)
You can learn more about the marriage allowance at https://www.gov.uk/marriage-allowance.
We also think Which have created a really good overview of the marriage allowance, which can be found at https://www.which.co.uk/money/tax/income-tax/tax-rates-and-allowances/marriage-allowance-explained-a5zku9t98m3j
The information is based on our understanding of current taxation, legislation and HM Revenue & Customs practice as at August 2021, all of which may be subject to change.
Andy Webb (The tax bonus 2m married couples haven’t claimed) Money Advice Service 26/09/2017, accessed 02/08/2021 – https://www.moneyadviceservice.org.uk/blog/the-tax-bonus-3-7m-married-couples-haven-t-claimed