Marriage Allowance Guide

As of April 6^th 2015, couples have been able to register for the new Marriage Tax Allowance also known as the married couples allowance.

It’s reported there are around 15,000 civil partnerships and 4 million marriages which could potentially benefit from the useful £212 annual tax saving.

That’s just £212 per tax year so if you’ve not claimed it in the past you can back date it for four tax years meaning you can get substantially more.

Marriage Allowance Criteria

You can apply for the Marriage Tax Allowance if:

• You are in a civil partnership or marriage.
• You were both born after 6^th April 1935.
• One member of the couple earns between £12571 and £50270 therefore paying the basic rate of income tax.
• One member of the couple earns less than £12570 therefore not paying any income tax at all and not using their full Personal Allowance.

The earning parameters can change for previous tax years and change each tax year moving forward pending announcements made in the governments budget.

Transferring marriage allowance

Transferring marriage allowance is beneficial and means the non taxpayer can transfer up to 10% of their unused Personal Allowance to their basic rate taxpaying partner.

As an example for the tax year 2015-2016 the Personal Allowance is £10,600, so you can transfer up to £1,060. It is worth remembering that ‘income’ includes wages, pensions and savings (excepting your £5,000 tax free savings interest).

The taxpayer then has their Personal Allowance increased to a maximum of £11,600, seeing a 20% tax saving of £212 incorporated into their tax code or as a reduction in their self-assessment payment.

As long as the lower earner only earns up to the tax free personal allowance in the year of the claim, then the higher earner can receive the full allowance and the entire £212 tax saving.

Marriage allowance example

Lucy and Ella are in a civil partnership and were both born after April 6^th 1935.

Lucy earns £6,000 working part time in the local library. As her full Personal Allowance is £10,600, they can apply to have £1,060 transferred over to Ella.

Ella is a marketing consultant, earns £35,000 and pays basic rate income tax. Her Personal Allowance can now be increased by Lucy’s additional £1,060 transfer to £11,660 giving them a saving of £212.

How do I get paid the marriage allowance?

You will receive the allowance through paying less tax in your salary each week or month. Your employer will know to deduct less tax because you will be given a new tax code which will be higher because of the marriage allowance. If you are transferring the allowance, your partner’s tax code will be changed accordingly.

You will normally see the letter M appear at the end of your tax code which indicates that you are in receipt of the marriage allowance.

Backdate your marriage allowance claim

There are multiple reasons why someone hasn’t claimed the marriage allowance when eligible however HMRC let’s you backdate your claim up to four tax years. You can backdate a claim if you are transferring the marriage allowance to your partner.

Marriage allowance P800

The tax office will send you a P800 when a claim for marriage allowance has been made for a previous tax year. A P800 will show you the amount of marriage allowance awarded, any refund of tax due along with information on how you can request any repayment of tax (either online or wait to receive a cheque through the post).

Claiming the marriage allowance

You must register for the Marriage Tax Allowance with HMRC.

You can click here to be taken to HMRC’s marriage tax allowance claim page.

Or you can call HMRC directly on 0300 200 3300.

You will then be invited to make an official claim. On average it can take up to 14 weeks to receive your invite and you will need to provide financial details and proof of identity as part of the process.

Cancel marriage allowance

HMRC needs you to tell them if you should no longer receive the marriage allowance. If you don’t it is likely that HMRC will find out at a later date and you will need to repay HMRC what you should not have received.

It is sometimes easy to forget tell HMRC a change in your personal circumstances especially in cases where the marriage allowance has been transferred by someone who earns less than the personal allowance but now has increased earnings over the allowed limit.

You can contact HMRC here to cancel your marriage allowance when you are ready.