Although most people marry for love, without wishing to sound horribly unromantic, there are also financial benefits to getting hitched.
One of these benefits is Marriage Allowance, which means that people who are married or in a civil partnership might be able to reduce their income tax bills by up to £252 a year. If one of you is over 89, you might be able to claim the Married couples allowance instead, which could save eligible couples up to £1037.50 a year on their tax bill.
There are currently around 2.1m couples who are eligible to claim this tax benefit but aren’t so if you think you might be eligible, it’s well worth applying.
Here’s what you need to know.
Contents
- What is Marriage Allowance?
- How much can I save with Marriage Allowance?
- Can I get Marriage Allowance?
- How do I apply for Marriage Allowance?
- Can you make a Marriage Allowance claim for previous years?
- Can I claim Marriage Allowance if my partner has died?
- Is Marriage Allowance the same as Married Couple’s Allowance?
What is Marriage Allowance?
The Marriage Allowance is a tax benefit available to married couples or civil partners. It allows people to transfer around 10% of their personal tax allowance to their spouse or civil partner if they meet the eligibility criteria.
Your Personal Allowance is the amount you can earn before you start paying tax, which this year is £12,570. Through the Marriage Allowance, if either you or your spouse earns less than this, the lower earning person can transfer up to £1,260 of their Personal Allowance to the higher-earning individual. This effectively increases the higher-earning person’s Personal Allowance to £13,830.
So, for example:
- You have an income of £11,000 so you don’t pay tax as you’re below your Personal Allowance.
- Your spouse or civil partner earns £21,000, so they pay the 20% basic rate tax on £8,430 giving a tax bill of £1,686 for the year.
- If you claim Marriage Allowance, you can transfer £1,260 of your unused Personal Allowance to your partner. This will change your Personal Allowance to £11,310 and boost theirs to £13,830.
- This will mean that now they’ll be paying 20% tax on £7,170, giving them a new tax bill of £1,434, which is a saving of £252.
How much can I save with Marriage Allowance?
The exact amount you’ll be able to save as a couple will depend on what you’re both earning, but you might be able to reduce your tax bill by up to £252 a year.
Can I get Marriage Allowance?
To be eligible for Marriage Allowance you’ll need to meet the following criteria:
- You’re married or in a civil partnership and are not currently receiving Married Couple’s Allowance
- One of you doesn’t pay tax because you earn less than the Personal Allowance of £12,570
- The other person is a basic rate taxpayer, earning between £12,571 to £50,270
- You were born after 6 April 1935. Anyone born before this date may be able to claim Married Couple’s Allowance instead.
These thresholds can apply to a range of situations, whether that’s one person not working, one of you claiming benefits or even different pension incomes. The bottom line is, if you meet the above criteria, you can apply for Marriage Allowance.
How do I apply for marriage allowance?
The quickest way to apply for Marriage Allowance is online through gov.uk, and the person who earns the least should make the claim.
To apply online, you’ll need to use your Government Gateway ID, if you have one, if not you’ll need to prove your identity to set one up. To do this you’ll normally need your National Insurance number of postcode and two forms of ID, including UK passport, photocard driving licence, payslip or P60 from the last 3 months or details of a tax credit claim, Self Assessment tax return or credit record if you have them.
If you can’t apply online, you can also apply through Self Assessment tax returns here, if you already do this, or by downloading, printing and filling out this form and posting it to:
Pay As You Earn and Self Assessment
HM Revenue and Customs
BX9 1AS
If you’re eligible, HM Revenue and Customs (HMRC) will change the tax code for the partner receiving the Personal Allowance transfer (the higher earner) to ‘M’, to show they are receiving Marriage Allowance from their spouse. If the partner who made the Personal Allowance transfer is employed, then their tax code will change to ‘N’, to show that they chose to use the Marriage Allowance.
These tax codes will continue to be used each year unless you notify HMRC of a change of circumstances. If your circumstances change, and you’re no longer eligible, you’ll need to notify HMRC here.
Can you make a Marriage Allowance claim for previous years?
You can back date claims for Marriage Allowance by up to four years, so you can currently claim as far back as 5 April 2019. However, you must meet the criteria for each year that you wish to receive Marriage Allowance for. And it’s important to remember that the threshold for non-tax payers and basic rate taxpayers is different according to the tax year you’re claiming for, so your allowance may not be the same every year.
Can I claim Marriage Allowance if my partner has died?
You can still apply for Marriage Allowance if your partner died after 2015 and you meet the other criteria for Marriage Allowance.
Under these circumstances, you’ll be applying for a backdate of the benefit, so you’ll get the benefit as if you had applied for it from April 2015. The benefit amount will be worth up to £1,150 but you can only get payments for the years which you were both alive.
Is Marriage Allowance the same as Married Couple’s Allowance
Couples who were born before 6 April 1935 may be able to claim the Married Couple’s Allowance rather than the Marriage Allowance. This means that the highest earner in the couple will receive 10% off their income tax.
If you got married before 5 December 2005, it will be the husband’s income that will be used to work out how much Married Couple’s Allowance you’ll receive – although this can be transferred to the wife. For any couples who got married after this date, it will be the income of the partner with the highest earnings which will be used to calculate the benefit amount.
Although the highest earner will get 10% off their income tax, there are upper and lower limits for the amount of tax relief that can be claimed and for how much can be earned.
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