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?
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.
Look After My Bills Newsletter
Get the best money-saving tips, tricks and deals sent straight to your inbox every week. Make sense of your money in partnership with The Money Edit.
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 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!
-
Three energy firms pay £8m in switching compensation - has your provider paid out?
More than 100,000 customers have received compensation after changing providers, but is now a good time to switch energy suppliers?
By Tom Higgins Published
-
Save £300 on your supermarket shop with cashback accounts
Banks, credit card companies and cashback sites are all offering cashback on your supermarket shop, but can you use them all to max out your savings?
By Vaishali Varu Published
-
Save on petrol: how to save 5p off a litre of fuel at Morrisons
Petrol prices may have been falling since last summer but every penny counts at the pump. Here’s how to save 5p a litre at Morrisons for a limited time
By Sue Hayward Published
-
Morrisons relaunches discount scheme with cheaper prices for loyal shoppers
Morrisons is the latest supermarket to revamp prices and offers for its loyalty scheme members
By John Fitzsimons Published
-
Coronation freebies and discounts: what’s up for grabs
From free railcards and holiday giveaways to discounts off food, we highlight the special offers launched to mark the coronation of King Charles III
By Ruth Emery Last updated
-
8 ways to get interest-free money if you’re struggling
Here are 8 clever ways to get interest-free income if you’re struggling with the rising cost of living
By Vaishali Varu Last updated
-
Best birthday freebies and discounts
Enjoy your special day with these birthday discounts and freebies - we highlight 22 of the best offers
By Vaishali Varu Published
-
Festival ticket scam warnings – how to protect yourself
Concert ticket scams have rocketed by more than 500% over the past year, while festival fraud has more than doubled. Here’s how to keep yourself safe ahead of the festival season.
By Tom Higgins Published
-
Co-op Member Prices: Supermarket unveils discount scheme for loyal shoppers
New Co-op scheme means reduced prices for shoppers who join the co-operative. How much does it cost to join, and how does it compare to similar schemes run by Sainsbury’s and Tesco?
By John Fitzsimons Published
-
Emergency alert test: what to expect and how to avoid being scammed
We tell you everything you need to know about the UK’s first emergency alert test, which takes place this Sunday
By Vaishali Varu Published