Are you married or in a civil partnership? If so, you may be entitled to a £1,258 tax break called the marriage tax allowance. It is estimated about one million couples are still missing out! Are you one of the millions of people who are eligible but haven’t claimed yet? Found out what it is and how it works below!
What is the Marriage Allowance?
The allowance can be claimed by married couples or those in a civil partnership. The allowance allows couples to transfer 10% of one partner’s tax-free personal allowance to the higher earning partner each year. So, in 2024/25 tax year this would be £1,260, therefore potentially cutting the higher earner’s income tax by up to £252.
Who is eligible?
Eligibility depends on how much you earn. The allowance can only be transferred if:
- One partner has a total income of £12,570 or less and,
- The other partner is not a higher rate or additional rate taxpayer (earning £50,270 or less).
So basically, one partner must be a non-taxpayer and the other a basic rate taxpayer. The non-taxpayer transfers 10% of their personal allowance for the tax year in question. Please be aware that if the non-taxpayer has already used part of their personal allowance and the 10% transfer tips them over the £12,570 threshold, they will have to pay tax on the difference!
How to apply?
The non-taxpaying partner can apply online here. You will need:
- National Insurance for both partners
- Proof of identity such as payslip details, p60, passport details or the bank account number where you receive any benefits/tax credits/pensions etc.
Assuming the application is successful, HMRC will provide the taxpaying partner with the extra allowance by changing their tax code, or when they submit their Self-Assessment Tax Return. Once it has been processed (this can take up to 2 months), the change will be backdated to the start of the current tax year.
If you are eligible to claim the allowance, your claim can be backdated to include each tax year since 2020/21:
- 2020/21 – £250
- 2021/22 – £252
- 2022/23 – £252
- 2023/24 – £252
So, assuming you’ve not made any claim to date, you could be eligible for a tax refund of £250 + £252 + £252 + £252 + £252 = £1,258 in total!
How long can you claim for?
HMRC will continue to pay the allowance unless you inform them that your circumstances have changed e.g., if your get divorced, your civil partnership is dissolved or if your partner dies.
If you would like any further clarification, please do not hesitate to contact us.
