What is Marriage Tax Allowance?

What is Marriage Tax Allowance?

If your spouse or civil partner earns more than you, the marital tax allowance allows you to transfer £1,260 of your personal tax allowance (the sum you will receive tax-free per tax year) to them.

If your claim is approved, it will reduce the higher earner’s tax bill for the current tax year;  you will also be able to backdate your claim up to 4 years if you are eligible. The backdated amount will be sent to you in the form of a cheque and the current tax year amount will be added as a tax credit to the higher earner’s tax account with HMRC. This tax credit will continue to be added every year as long as both partner’s circumstances do not change.

  • You must be married or in a civil union (only living together does not qualify).
  • One of you must be a non-taxpayer between April 6, 2021, and April 5, 2022, which normally means earning less than the £12,570 personal allowance (see previous personal allowance rates).
  • The other spouse must be a basic 20 percent rate taxpayer (this allowance is not available to higher or additional-rate taxpayers). This means you’d have to make less than £50,270 (see previous tax year rates) or £43,662 if you live in Scotland (see previous tax year rates).
  • You and your partner must have been born on or after April 6, 1935 (if you weren’t, there’s another tax benefit).

So, in a nutshell, one of you must be a non-taxpayer and one must be a basic-rate taxpayer.

How can I check if I am a non-taxpayer?

Your personal tax allowance (the amount you can receive tax-free) can vary from the amounts above in rare cases, but your tax code letter would tell you. This may be because you have a company vehicle, owe taxes, or your savings interest puts you over the limit.

A general rule of thumb you can use is if you are earning more than £1000 gross per month, then you are probably paying tax and if it is less than £1000 gross per month, then you are not paying income tax on your salary.

You can also check how much (if any) tax you are paying via this HMRC link

Can you claim marriage allowance if your partner does not work?

Yes, if you or your partner are a low earner or not working, then you may be eligible for the marriage allowance. As long as the 2nd partner is a basic 20 percent rate taxpayer, the marriage allowance allows lower earning couples to share part of their personal tax-free allowance.

How much is Marriage Allowance worth?

For the tax year 2021/22, the marriage tax exemption is worth up to £252. If you’re qualified and apply successfully, you’ll get the tax break every year after that, so there’s no need to keep reapplying.

You can backdate the claim for up to four tax years (currently 2017/18, 2018/19, 2019/20, and 2020/21) in addition to the current year’s allowance. 

The amounts for each year are worth up to:

  • 2021/22 – £252
  • 2020/21 – £250
  • 2019/20 – £250
  • 2018/19 – £238
  • 2017/18 – £230

This means you will get up to £1,220 if you claim for this tax year and backdate the maximum four years. This will happen without you having to check any boxes or make a special request – it will happen automatically.

However, if you want to claim for the 2017/18 tax year, you must do so by April 5, 2022. When the new tax year begins after this date, the furthest you’ll be able to backdate your marriage tax allowance claim will be to 2018/19. Although you’ll still get roughly the same amount – the current tax year plus up to four backdated years – the £230 you should have received for 2017/18 will be lost.

How the Marriage Tax Allowance is calculated

A spouse with unused personal allowance will pass £1,260 to the other (so basically 10 percent of the full allowance). They are only allowed to transfer £1,260 – neither more nor less.

How long does it take for marriage allowance to be paid?

It can take up to two months for HMRC to process the changes to the recipient’s tax code. If the recipient is self-employed then the rebate should be processed when they file their tax return.

At the time of writing this article, HMRC has a backlog of claims to deal with and is currently taking aprox 10 weeks to respond to applicants.

Do you apply for marriage allowance every year?

You do NOT have to apply every year.

Your personal allowance will transfer automatically to your partner until one of you cancels the marriage allowance or you inform HMRC that your circumstances have changed, eg, because of divorce, employment pushing you into a higher-rate tax threshold or death.

How do I stop my marriage tax allowance?

You must cancel Marriage Allowance if any of the following apply:

  1. your relationship ends – because you have divorced, ended (‘dissolved’) your civil partnership, or legally separated.
  2. your income changes and you’re no longer eligible.
  3. you no longer want to claim.

You can cancel your marriage allowance by writing directly to HMRC

How to apply for Marriage Allowance

Claim My Tax Back can help you claim for Marriage Allowance. Our application is 100% completed online and only takes a couple of minutes.

Once you apply for Marriage Allowance once, you do not need to apply for it again as it stays in your tax code.

Click the button below to get started with your claim!

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