Marriage tax allowance allows you to transfer 10% of your unused personal allowance (the amount you can earn tax-free each tax year), to your spouse or civil partner, if they earn more than you.
What is Marriage tax allowance?
In April 2015, the UK Government introduced Marriage Tax Allowance, a new income tax break for married couples and civil partners.
Marriage Allowance allows the lower earner within the marriage or civil partnership to transfer £1,250* of their unused Personal Allowance to their higher-earning partner. Doing this will reduce the higher earner’s income tax bill by £250*
(*Based on 2019/2020 personal tax allowance).
Your income is £10,500 and your Personal Allowance is £12,500, so you don’t pay tax.
Your partner’s income is £20,000 and their Personal Allowance is £12,500, so they pay tax on £7,500 (their ‘taxable income’). This means as a couple you are paying Income Tax on £7,500.
When you claim Marriage Allowance you transfer £1,250 of your Personal Allowance to your partner. Your Personal Allowance becomes £11,250 and your partner gets a ‘tax credit’ on £1,250 of their taxable income.
This means you still do not pay tax, and your partner, now will only pay tax on £6,250. As a couple you benefit, as you are only paying Income Tax on £6,250 rather than £7,500, which saves you £250 in tax.
Are we eligible?
Marriage Allowance is an elective tax break, meaning that eligible couples will not receive the tax break unless a claim is made. If no claim for Marriage Allowance is made, the taxpayer’s entitlement is simply written off, and the funds retained by the Government.
- You must be married or in a civil partnership.
- One of the parties to the marriage or civil partnership (so either you or your partner) will need to be earning more than the annual personal allowance and one of you will need to have an annual income of less than the Personal Allowance for the Tax Year(s) in which you wish to claim.
(Personal allowance for 2019-2020 is £12,500).
You cannot claim Marriage Allowance if you’re living together but you’re not married or in a civil partnership.
It will not affect your application for Marriage Allowance if you or your partner:
- Are currently receiving a pension.
- Live abroad – as long as you get a personal allowance.
Can I backdate my Marriage Allowance application?
Applying for Marriage Allowance Tax Rebate through our online application will allow you to automatically backdate your claim to include any tax year since April 2015 for which you are eligible for Marriage Allowance.
If your partner has passed away since April 2015, HM Revenue & Customs’ guidance states that you will generally still be able to apply for Marriage Allowance, provided the eligibility criteria were met at the time. If your partner was the lower earner of the two of you, then the person responsible for managing their tax affairs will need to apply.
How much will I receive?
The marriage tax allowance for the tax year 2019/20 is £250. However, you can get a rebate by back-claiming by up to four years. The amounts for each year are:
- 2015/16 – £212
- 2016/17 – £220
- 2017/18 – £230
- 2018/19 – £238
- 2019/20 – £250
This means that if you claim now and backdate, so you get this year’s, and all the previous years’ allowance, you’ll get up to £1,150.
The 2019/20 rebate amount of £250 will be applied to your current tax year liability as a credit and you will be paid money for previous tax years as a cheque.