Applying for Marriage Tax Allowance

Applying for Marriage Tax Allowance

If you’re married or in a civil partnership, you may be entitled to a £1,220 tax break called the marriage tax allowance. Approximately 2.4 million qualifying couples miss out on this.

Marriage Allowance first came into effect on 6 April 2015. Some couples are only just becoming aware of the marriage allowance. The good news is that claims can be backdated for up to four years.

The marriage allowance allows an individual to transfer 10% of their personal allowance (£12,570 in 2021/22 so the amount transferred is £1,257) to their spouse or civil partner. 20% of this allowance is then given as a reduction in the recipient’s tax bill. This can result in anything up to a £252 tax saving for the couple.

If you match these requirements, you may be eligible for Marriage Tax Allowance:

  • You’re married or in a civil partnership.
  • One of you needs to be a non-taxpayer, which usually means earning less than the £12,570 personal allowance between 6 April 2021 and 5 April 2022.
  • The other partner needs to be a basic 20% rate taxpayer. This means you’d normally need to be earning above £12,570 and less than £50,000 (previous tax year rates) or if you live in Scotland, £43,430 (previous tax year rates).
  • You both must have been born on or after 6 April 1935.

How much will I get from Marriage Tax Allowance?

The marriage tax allowance for the tax year 2021/22 is a maximum of £252.

And in addition to this tax year’s allowance, you can also backdate your claim by up to four tax years.

Example

Your income is £11,500 and your Personal Allowance is £12,570, so you do not pay tax.

Your partner’s income is £20,000 and their Personal Allowance is £12,570, so they pay tax on £7,430 (their ‘taxable income’). This means as a couple you are paying Income Tax on £7,430.

When you claim Marriage Allowance you transfer £1,260 of your Personal Allowance to your partner. Your Personal Allowance becomes £11,310 and your partner gets a ‘tax credit’ on £1,260 of their taxable income.

This means you will now pay tax on £190, but your partner will only pay tax on £6,170. As a couple you benefit, as you are only paying Income Tax on £6,360 rather than £7,430, which saves you £214 in tax.

How does Marriage Tax Allowance work?

You will only get the full benefit if the person giving up the allowance is not using it AND the person receiving the tax reduction can use it.

This can result in the couples being able to make the following tax savings:

  • 2021/22 tax year: the personal allowance is £12,570, meaning £1,270 can be transferred to your spouse (maximum tax saving of £252)
  • 2020/21 tax year: the personal allowance was £12,500, meaning £1,250 can be transferred to your spouse (maximum £250 tax saving).
  • 2019/20 tax year: the personal allowance was £12,500, meaning £1,250 can be transferred to your spouse (maximum £250 tax saving).
  • 2018/19 tax year: the personal allowance was £11,850, meaning £1,190 (rounded up) can be transferred to your spouse (maximum £238 tax saving).
  • 2017/18 tax year: the personal allowance was £11,500, meaning £1,150 can be transferred to your spouse (maximum £230 tax saving).

You need to meet the criteria in each individual tax year to be eligible for the marriage allowance.

The potential tax savings for each year are:

2017/18 – £230

2018/19 – £238

2019/20 – £250

2020/21 – £250

2021-22 — £252

If you claim back for all the previous four years, the total you will get is up to £1,220.

How long does HMRC take to process my claim for Marriage Allowance?

Currently, HMRC is taking up to 10 weeks to process claims for Marriage Allowance, followed by a cash payment (cheque or bank transfer) for the backdated aspect of your claim and a change of tax code for both partners, so that the higher earner pays less tax this year.

You would also normally receive new tax code notifications from HMRC with either a letter N or M at the start of your new tax code. The M code means that you have received 10% of your partner’s allowance, while the N code means you have transferred 10% of your allowance to your partner.

Stopping Marriage Allowance

Your Personal Allowance will transfer automatically to your partner every year until you cancel Marriage Allowance – for example, if your income changes or your relationship ends.

How can I claim for Marriage Allowance?

Claiming for the marriage allowance is very simple. You can use our free and simple online calculator to find out how much you could be owed. Our application is all completed online and takes under 3 minutes!

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