The marriage tax allowance has been around since April 2015 and around 2.4 million qualifying couples miss out on it.
Are you missing out on it? It may be worth looking into!
In this article, we’ll look at what marriage tax allowance is, how it works and whether you could benefit from claiming it.
What is marriage tax allowance?
The marriage tax allowance is a tax-free boost for married couples or those in civil partnerships.
It means that if you’re an eligible couple, you can earn up to £1,150 more each year before paying any income tax.
It is worth knowing that the marriage tax usually increases yearly, from the start of the new tax year (April 6).
If you’re married or in a civil partnership, one of you can transfer up to £1,260 of your Personal Allowance to the other if they earn more than you.
This is just over 10% of the basic £12,570 Personal Allowance for the 2022-23-tax year – is the amount of income you don’t have to pay tax on.
If your claim is successful, the higher earner will have a lower tax bill for the tax year.
Marriage tax allowance: eligibility
Here are the circumstances where you would be eligible to apply:
- You need to be married or in a civil partnership: just living together doesn’t count
- One of you needs to be a non-taxpayer.: this usually means you’ll earn less than the £12,570 personal allowance between 6 April 2022 and 5 April 2023
- The other partner needs to be a basic 20% rate taxpayer: this means you’d normally need to earn less than £50,270, or if you live in Scotland, £43,662. Higher or additional-rate taxpayers aren’t eligible for this allowance
- You both must have been born on or after 6 April 1935: if not, you may still be able to benefit from Married Couple’s Allowance
In a nutshell, one of you must be a non-taxpayer and one must be a basic rate taxpayer.
Your application will not be affected if you or your partner:
- Are currently receiving a pension
- Live abroad – as long as you get a Personal Allowance
Backdating your marriage allowance claim
You are also able to backdate your claim if necessary – your claim can include any tax year since 5th April 2018.
If your partner has passed away since 5 April 2018, you can still claim marriage tax allowance. If you need help with your specific claim, you can call the income tax helpline for support.
How to apply for marriage tax allowance
You can apply for marriage allowance for free online.
The person in the marriage or civil partnership who earns the least should make the claim.
If you receive other income such as dividends or savings, we recommend you contact the Income Tax Helpline for advice on your specific situation.
Cancelling your marriage allowance
You must cancel your marriage allowance if:
- Your relationship ends – because you’ve divorced, ended (or ‘dissolved’) your civil partnership or legally separated
- Your income changes and you’re no longer eligible
- You no longer want to claim marriage allowance
If your income changes and you’re not sure if you should still claim, contact HMRC directly to seek individual advice.
You can cancel your marriage allowance online or by phone.
In tough economic times, it’s best to receive extra money where you can!
So make sure you don’t miss out on this if you and your partner qualify for this.
Do you need help with your accounting issues? Get in touch with Accountants East London today – we’re here to help.