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How married couples can cut their tax bill by £220

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Written by: Paloma Kubiak
06/04/2016
The amount you can transfer to your husband, wife or civil partner as part of the ‘marriage allowance’ to reduce their tax bill has increased to £1,100.

If you earn £11,000 or less and your partner is a basic rate taxpayer, they may be eligible to get a £220 tax break this year.

The marriage allowance lets you to transfer 10% of your £11,000 personal allowance to your spouse so that they have an additional £1,100 allowance before they start paying tax.

Usually any income above the personal allowance is taxed at your marginal rate. But as part of the government’s move to ‘reward marriage’, the additional £1,100 allowance that they would have paid 20% basic tax on is now tax-free, meaning they save £220 this year.

But, HM Revenue & Customs confirmed that if you were eligible for the marriage allowance in the 2015/16 tax year you can backdate your claim.

In the previous tax year, the personal allowance was £10,600 so you could have transferred £1,060 to your partner, meaning they could cut their tax bill by £212.

In total you could reduce your spouse’s tax bill by £432.

Who’s eligible for the marriage allowance?

You can get the marriage allowance if all of the following apply:

  • You’re married or in a civil partnership
  • You don’t earn anything or your income is under £11,000
  • Your partner’s income is between £11,001 and £43,000 so they can’t be a higher or additional rate tax payer

You can also apply for the marriage allowance if you or your partner are currently receiving a pension or if you’re living abroad.

How do I apply and how can I backdate my claim?

The individual with the lower income and the unused personal allowance will need to make the claim as they’re electing to give up the allowance.

They can apply online via the government’s marriage allowance site (it said it should take less than 10 minutes) and during the application, it will ask you whether you wish to backdate your claim.

Once the application has gone through, the higher income partner will have an increased personal allowance while the partner with the lower or no income will have a reduced personal allowance.

HMRC said that for anyone who applied for the marriage allowance in the last few weeks of the 2015/16 tax year, they’ll receive the £212 repayment directly via a payable order, a kind of HMRC cheque.

It added that it may take some weeks for repayments to be sent out though to benefit from this tax year’s marriage allowance benefit, those eligible will see their tax code adjusted.

Marriage allowance vs married couple’s allowance

The marriage allowance is separate to the married couple’s allowance. The latter could reduce your tax bill by between £322 and £835.50 a year.

But one of you must be born before 6 April 1935. If you and your partner were born on or after 6 April 1935 you’ll be eligible for the marriage allowance as detailed above.

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