Marriage Allowance will allow a couple who are married or in a civil partnership to transfer £1,250 of an individual’s Personal Allowance, subject to meeting the following criteria:
- The low earner must normally have income below the Personal Allowance (presently £12,500) and not pay income tax.
- The higher earner must be a basic rate taxpayer, which usually means an income of between £12,501 and £50,000.
- if the applicant receives other income such as dividends or savings income, these income sources would need to be factored in.
Effectively, this could reduce an individual’s tax bill by up to £250 in this tax year. In pounds and pence, this could mean that a married couple could see almost an extra £21 per month.
It will not affect an application for Marriage Allowance if:
- A pension is in payment.
- The applicants live abroad (as long as they get a Personal Allowance).
There are many eligible married couples out there that do not apply for Marriage Allowance and over time, the amount that could have been claimed is definitely worth having.
If one of the two applicants were born before 6 April 1935, there may be a greater benefit as a couple by applying for Married Couples Allowance instead.
If the applicant is in Scotland, different rules and criteria apply.
Can a claim be backdated?
Good news… it absolutely can! A claim can be backdated to include any tax year since 5th April 2015, subject to being eligible of course.
A claim can also be made if a spouse of civil partner passed away between now and 5th April 2015.
How can Marriage Allowance be claimed?
An application can be made online, however the person with the lowest income should make the claim. Alternatively, a claim can be made by calling HMRC.
How the Personal Allowances change upon successful application
HMRC will give the higher earner the extra allowance by:
- Changing their tax code.
- Upon submission of a Self-Assessment tax return.
What if circumstances change?
Divorce of dissolution of a Civil Partnership
HMRC need to be notified and the Marriage Allowance will cease.
A change in income
HMRC should be contacted and they will tell the couple claiming Marriage Allowance if they can still benefit or if it needs to be cancelled.
If a partner dies after having some Personal Allowance transferred to them
The person who transferred their Personal Allowance will go back to normal.
If a partner dies after transferring their Personal Allowance
The person who received the Marriage Allowance will remain at the higher level until the end of the tax year.
In any case, HMRC should be notified in the event that circumstances change.