Marriage Allowance: how to get a £1,150 tax break

Marriage Allowance: how to get a £1,150 tax break

Around one million eligible couples are missing out on the Marriage Allowance, which could be worth £1,150. Here's all you need to know

lovemoney staff

Household money

lovemoney staff
Updated on 5 April 2019

Couples in the UK could be missing out a tax break worth the best part of a grand.

The Marriage Allowance is a controversial handout available to certain couple's who are married or in a civil partnership.

And while three million eligible couples have taken this up, a further million are still missing out, according to HMRC.

As the annual allowance, can be backdated to when it was introduced, it could mean you and your significant other are missing out on more than £1,150.

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How does the Marriage Allowance work?

The Marriage Allowance is a tax-break for married couples or those in a civil partnership and was introduced by the Government in April 2015.

It allows you to share part of your tax-free Personal Allowance with a partner in order to lower your joint overall tax bill.

For example, in the current tax year 2019/20, one partner can transfer up to 10% of their unused personal tax allowance to their spouse or civil partner.

If you were able to transfer the full 10% now, that would mean a saving of £250 for the current tax year.

Importantly, you can also apply for this to be backdated by up to four years. It’s only been in place for three years so far, but that means that if you qualify but haven’t already registered then you could apply for an additional £900 in total.

That’s worked out as £212 for 2015/16, £220 for 2016/17, £230 for 2017/18 and £238 for 2018/19.

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What about bereaved partners?

Buried away in the Budget was a small but welcome announcement. If you and your spouse were eligible for the allowance at any point after it was introduced then you can make a retrospective claim.

In the past, you could not make a backdated claim if your partner had died.

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Who is eligible?

As we’ve already mentioned you’ll need to be married or in a civil partnership to apply for the Marriage Allowance. Unfortunately, living together even if you have children doesn’t make you eligible for the scheme.

Both partners need to be born on or after 6 April 1935 (if one or both of you was born before this date you can claim the Married Couple’s Allowance).

One partner needs to be a non-taxpayer, which means they earn under the Personal Allowance threshold. For 2015/16 that means earning less than £10,600, for 2016/17 less than £11,000, for 2017/18 less than £11,500, for 2018/19 £11,850 and for this tax year £12,500.

The other partner has to be a basic rate taxpayer. For the 2015/16 that means earning less than £42,385, for 2016/17 less than £43,000, for 2017/18 £45,000, for 2018/19 less than £46,350 and for this tax year £50,000.

How to apply

You can apply for the Marriage Allowance on the HMRC website or by phone on 0300 200 3300.

You’ll need both of your National Insurance numbers plus ID for the non-taxpayer. It should be the non-taxpayer that makes the application.

HMRC will notify you if you are eligible for the allowance and whether you are also eligible for the backdated allowance.

Most of the time the Marriage Allowance will be paid adjusting the recipient partner’s tax code. The transferring partner will also get a new adjusted tax code for the year.

The Marriage Allowance will continue to be paid until you cancel it or you inform HMRC that your circumstances have changed.

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