Marriage Tax Allowance claimed by only half of eligible couples

The Marriage Tax Allowance could get you a cash boost of up to £252 a year, are you missing out?

Groom putting ring on bride's finger
(Image credit: Getty images)

The Marriage Tax Allowance is boosting the household income of more than two million couples according to HMRC, but another two million could be missing out.

The Marriage Allowance is given to married couples and those in civil partnerships and allows them to reduce the amount of tax they pay by up to £252 a year.

Eligible couples can also backdate a claim by up to four years alongside applying for marriage allowance for the current tax year - this can be worth up to £1,242. So even if you’ve been together for years, you can still tap up HMRC for a belated wedding present.

What is the Marriage Allowance? 

The Marriage Allowance allows couples to share their tax free allowances to help boost their household income.

If one partner is a non taxpayer – earning below the personal allowance limit of  £12,570 - while the other is a basic rate taxpayer, earning less than £50,270, (or £43,662 in Scotland), the non tax paying partner can apply to give the other a slice of their tax free personal allowance.  

You can’t decide how much to hand over – it’s a fixed amount of £1,260.  

By transferring this chunk across the other partner gets a boost to the amount they can earn before paying tax.

For example, let's say you earn £10,000 a year and your spouse earns £35,000.

As you earn less than the personal allowance of £12,570, you are a non-taxpayer.

You can give £1,260 of your personal allowance to your spouse - this means the amount you can earn tax-free is now £11,310. But as you earn below this new threshold, you still remain a non-taxpayer.

Before the transfer, your spouse’s annual tax bill would have been their salary of £35,000 minus the £12,570 personal allowance - this means their taxable income  in this case is £22,430. Taxed at the 20% basic rate, that’s a tax bill of £4,486.

But thanks to the transfer, your spouse’s annual tax bill will now be their salary of £35,000 minus the new £13,830 personal allowance. That means they only pay 20% tax on £21,170, giving a tax bill of £4,234 and an annual saving of £252.

You can claim for the current tax year plus the previous four years, providing you’re eligible, which can mean claiming back up to £1,242 from the taxman.

You can also use the calculator on the government website to find out how much money you can save by making a claim. 

Changes in circumstances can trigger a claim

It’s not only newly weds who should check if they can claim – even if you’ve been married or in a civil partnership for years – a change in circumstances could mean you could be due some extra cash.

According to HMRC this can include:

  • A change in income - if one partner is no longer working or on a lower salary and they earn below their personal allowance limit of £12,570.
  • If one partner retires while the other is still working.
  • One partner takes unpaid leave or a career break or takes maternity, paternity or shared parental leave.
  • One partner is studying and earns below their personal allowance limit.

Do I need to renew my claim each year? 

There’s no need to renew your claim each year as you’ll be automatically given the Marriage Allowance in subsequent years – however you must tell HMRC if your circumstances change because you might no longer be eligible for the money. 

Sue Hayward

Sue Hayward is a personal finance and consumer journalist, broadcaster and author who regularly chats on TV and Radio on ways to get more power for your pound.  Sue’s written for a wide range of publications including the Guardian, i Paper, Good Housekeeping, Lovemoney and My Weekly. Cats, cheese and travel are Sue’s passions away from her desk!

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