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How married couples can claw back £1,000 from the tax man

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Written by: Paloma Kubiak
08/11/2018
From the new tax year, eligible married couples will be able to claim a £250 tax break. But as claims can be backdated, they may be able to gain up to £1,150 via the Marriage Allowance.

The Marriage Allowance was introduced in April 2015. It lets someone earning less than the personal allowance transfer a small percentage of this allowance to their partner. This boosts the receiving partner’s personal allowance, meaning they can earn more before having to pay income tax.

As we know the personal allowance is rising to £12,500 in the new 2019/20 tax year, this figure can be used to work out how much can be transferred to the receiving partner and how much of a tax break it results in.

But the Marriage Allowance can be backdated up to four tax years, meaning eligible couples from 2015/16 may be able to gain up to £1,150 in total.

Here’s what you need to know…

The Marriage Allowance

You both need to be born on or after 6 April 1935. An individual earning less than the personal allowance can transfer 10% of this to their husband, wife or civil partner, as long as the recipient is a basic rate taxpayer.

It applies even if you currently receive a pension or you live abroad, as long as you still get a personal allowance.

The personal allowance for the new 2019/20 tax year is £12,500, meaning from 6 April 2019, £1,250 can be transferred to the partner. This results in a £250 tax break.

But as the Marriage Allowance can be backdated up to four tax years (all the way to 2015/16), this means eligible couples can also make the following claims, totalling up to £1,150:

  • 2018/19 tax year: the current personal allowance is £11,850, meaning £1,185 can be transferred to the partner, resulting in a £237 tax break. However, HMRC rounds the figure up to £1,190, meaning the recipient gets £238.
  • 2017/18 tax year: the personal allowance was £11,500 so £1,150 was transfer
    able, resulting in a £230 tax break.
  • 2016/17 tax year: the personal allowance was £11,000 so £1,100 was transferable, resulting in a £220 tax break.
  • 2015/16 tax year: the personal allowance was £10,600 so £1,060 was transferable, resulting in a £212 tax break.

How to claim the Marriage Allowance

To claim (the lower earner needs to apply), you need to have your National Insurance number and prove your identity via the online Marriage Allowance application portal, such as by giving details from your P60, payslips, passport or child benefit.

The personal allowance will transfer automatically to a spouse or civil partner every year until one partner cancels the Marriage Allowance because circumstances change, such as for divorce or earning over the personal allowance threshold.

Victoria Todd, head of the Low Incomes Tax Reform Group, said: “Many couples are missing out on this help because they are not aware of the allowance. We urge people to claim if they are entitled and if doing so would save them tax. The process for claiming should be relatively straightforward via the GOV.UK website. If you cannot claim online, you can telephone HMRC on 0300 200 3300 or write to them to make the claim.”

In order to claim back till 2015/16, couples have until 5 April 2020. For current tax year claims, your tax code will be amended or for the self-employed, this will be done via the self-assessment tax return. For backdated claims, you’ll receive a payable order – a cheque from HMRC.

The tax authority added that of eligible couples, 83% have now signed up to the Marriage Allowance, equating to 3.3 million couples.

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