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 2.2 million eligible couples have taken this up, a further two 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 £1,256.
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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 2023/24, one partner can transfer up to 10% of their unused tax allowance to their spouse or civil partner.
If you were able to transfer the full 10% now – which works out to £1,260 in the current tax year – that would mean a saving of £252 for the current tax year (that's a £126 saving for you and for her).
Importantly, you can also apply for this to be backdated by up to four years meaning it could be worth a handy £1,256 in total.
You can learn more about how it works on this Government page.
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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.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 2023/24 that means earning less than £12,570.
The other partner has to be a Basic Rate taxpayer.
For the current tax year that means earning less than £50,270.
If you are looking to claim for previous years it's important to remember that both the Personal Allowance and the threshold for being a Basic Rate taxpayer will be slightly lower so be sure to factor this into your eligibility calculations.
You can find previous years' tax allowances and rates here.
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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.
List of tax codes: check you're on the right UK tax code for 2022/23