If you are married or in a civil partnership, then you need to read this. Did you know that you can reduce your tax bill by a set amount due to this? Known as the marriage allowance tax, it is a set figure that can be deducted from your tax bill and mean you have more money in your pocket. Yet of the 4.2 million couples who are eligible for the tax break, only around 1.8 million are claiming it currently.
What are the rules?
The idea behind the tax is that couples can transfer a proportion of their personal allowance or the amount you can earn before you pay tax between one another. There are some specific circumstances that must apply before you can get the tax relief:
- You must be married or in a civil partnership, not just living together
- One of the couple needs to be a non-taxpayer who is earning less than the personal allowance rate – that’s currently £11,500
- The other person needs to be on the basic rate of tax which is 20% as higher rate tax payers (bigger earners) don’t qualify
- Both of you need to have been born after 6th April 1935
How it works
The first year that the tax allowance was granted for 2015 and it was worth £212. The following year it went up to £220 and for the year starting April 2017, it is £230. If you haven’t claimed for it, then you can backdate your claim for these years and means you could get a discount of £662. However, if you did claim it last year, then it will automatically be applied to this year’s tax. If you think it hasn’t been done, you can ring the marriage allowances contact number to check.
But where does this figure come from, you might wonder. The idea is that the person who has an unused amount of personal allowance because they aren’t earning that much can transfer £1150 to their partner – 10% of their current allowance. This is irrespective of how much of your allowance you have left so you might only have £50 but you can transfer the whole £1150.
- Part time worker earning £5000 a year has a personal allowance of £11,500 and can transfer £1150 to their partner
- The partner earns £35,000 a year so is a basic rate taxpayer and can apply that £1150 to their allowance, meaning they can earn £12,500 before paying tax
- This extra £1150 means the second person is paying £230 less tax a year
Applying for the allowance
There are various ways that you can apply for this allowance. For starters, you can ring the marriage allowances contact number in order to set up the claim there. You can also use the HMRC website to download the forms required to send off and apply for it – you can still use the contact number if you are uncertain about anything while filling them in.
One thing to remember – it is the non-tax payer who is the one making the claim and transferring their allowance to the person paying tax. So, the part-time worker in the example above is the one who would make the claim, not their partner earning £35,000.
It might take a couple of weeks for HMRC to reply to you when you send the form, that’s why most people use the contact number. They will let you know almost immediately if you qualify for the allowance and anything else you need to do to claim it. Then you can enjoy that little extra sum of money for anything you want!