Are you aware of the Government’s Marriage Allowance?
As of February 2023, HM Revenue & Customs (HMRC) estimated that over two million people are unaware of the Marriage Allowance tax relief which could save them up to £252 a year.
This quick guide will introduce you to what the Marriage Allowance is, will explain if you are eligible for it, and how you can ensure that you receive the Marriage Allowance.
What is the Marriage Allowance?
The Marriage Allowance is a tax relief which allows a couple who are married or in a civil partnership to ensure that both parties are using the full personal allowance of tax-free income.
It works by allowing the partner with a lower income (usually below the £12,570 a year threshold) to transfer the remaining personal allowance to the partner with a higher income.
Am I eligible?
Eligibility for the Marriage Allowance varies from if you live in England and Wales or if you live in Scotland.
This is the criteria for if you live in England and Wales:
- You are married or in a civil partnership
- You do not pay Income Tax or your allowance is below your personal allowance (usually £12,570)
- Your partner pays Income Tax at the basic rate, meaning their income is usually between £12,750 and £50,270
The criteria in Scotland remains the same for the first two terms, but differs slightly for the third in that your partner must pay the starter, basic, or intermediate rate, meaning that their income should be between £12,571 and £43,662.
Can I backdate my claim?
Currently, you are allowed to backdate your Marriage Allowance claim for up to four years (excluding the current tax year) so long as you are eligible for the years you are claiming for.
The maximum amount you are allowed to claim for each year varies. Below details what the maximum amount is for each year.
- 2019 – 2020: £250
- 2020 – 2021: £250
- 2021 – 2022: £252
- 2022 – 2023: £252
How can I apply for Marriage Allowance?
You can apply for the Marriage Allowance tax break for free online through the Government website. If both partners only have income through their wages, then the person who earns the least should make the claim.
If either of partner gets additional income through dividends or savings, then you may need to work out who should make the claim first.
What do I do if my circumstances change?
If your circumstances change, then you must cancel your Marriage Allowance. Examples of this include:
- If your relationship ends through a divorce, a legal separation, or your relationship is ‘dissolved’
- If your income changes and you are no longer eligible
- If you no longer want to claim
You can cancel your Marriage Allowance both online and over the telephone. After cancelling, you need to be aware of underpaying tax for the rest of the year.
In the event that your partner dies after you have transferred some of your personal allowance to them, then your personal allowance will go back to the normal amount, and their estate will be treated as having the increased personal allowance.
If you would like to find out more information about Marriage Allowance or would like to some advice about it, please do not hesitate to contact us.