The Marriage Allowance was introduced in the 2015-16 tax year to enable spouses and civil partners to transfer part of their income tax personal allowance if they are not earning up to the threshold.
This is different to the Married Couples Allowance (MCA) which only benefits couples if one of them was born before 6th April 1935.
Therefore, The Marriage Allowance is a viable alternative. It is important to note that if the Married Couples Allowance is being claimed you will not be eligible to claim for the Marriage Allowance.
A lot of couples are not aware of the Marriage Allowance and its existence and the Marriage Allowance is a great opportunity to make use of a personal allowance that is not being fully used up.
This could reduce their tax by up to £252 in the tax year.
How do you make a claim for Marriage Allowance?
Firstly it comes down to the couple to notify HMRC of their intention to claim. And there are a couple of ways to notify the HMRC of your intention to claim Marriage Allowance:
- The easiest way to claim is to login to www.gov.uk and type in Apply for Marriage Allowance and fill out the online form.
- Alternatively there is a box to tick on a Self-Assessment Tax Return to action this.
How could I benefit from Marriage Allowance?
On the HMRC website there is a calculator which could be used to see how much a couple will benefit from claiming this allowance. It is worth noting for a non-taxpayer who earns between £11,310 and £12,570 this allowance may not be beneficial.
Some instances where the Marriage Allowance could be used:
- Maternity Leave
- Part Time Workers
- Someone who is receiving a pension which is below the personal allowance threshold
Let’s consider Maternity Leave in detail. This allowance is ideal if the partner is on Maternity Leave and not using up all their personal allowance, due to the fact that it can be claimed for the sole year of the leave, and then cancelled.
Okay in the great scheme of things a reduction of £252 is not going to change the world, but you can back date a claim for 4 years if the conditions are met in each year.
How much unused personal allowance can be considered?
Legislation permits up to 10% of unused personal allowance to transferred, so is set at £1,260. As the personal allowance has been frozen until 2028 this amount will remain the same until that date.
The way you will receive the transfer is via your PAYE Tax Code.
Finally, if during the tax year a couple should divorce or unfortunately should pass away the allowance will remain in place for the whole of that tax year, as long as the claim was made before either event.
The UK Marriage Allowance in summary
The UK Marriage Allowance lets a spouse or civil partner transfer 10% of their personal tax allowance to the other, potentially saving up to £252 in taxes each year. It applies if one partner earns less than the personal allowance threshold and the other is a basic rate taxpayer.
It’s easy to apply and can provide valuable financial relief.
Please feel free to contact me at Tandem Business Solutions to see if we can assist you in anyway.
You can get in touch with me by hitting the Book a Call button at the top of this website.