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How married couples can claim a £600 tax break

Paloma Kubiak
Written By:
Paloma Kubiak

Married couples may be eligible to receive a tax break worth around £600 in total. Here’s what you need to know and how to claim.

The Marriage Allowance was introduced in April 2015. It lets an individual who earns less than the personal allowance to transfer a small percentage of the allowance to their partner. This boosts the receiving partner’s personal allowance, meaning they can earn more before they start to pay tax.

Around four million married and civil partner couples are eligible for the tax break but HM Revenue & Customs (HMRC) reports that only 1.73 million are benefitting.

This means there are still more than two million couples who are missing out. Here’s how it works and how you can claim your money.

How the Marriage Allowance works

An individual earning less than the personal allowance can transfer 10% of their personal allowance to their husband, wife or civil partner.  This increases their earnings threshold and reduces their tax bill. It applies even if you currently receive a pension or you live abroad, as long as you still get a personal allowance.

The current personal allowance (2016/17 tax year) is £11,000 so the lower income earner can transfer £1,100 to their partner.

The scheme is only available if the receiving partner is a basic rate tax payer, so the 20% tax that they would have paid on £1,100 is now tax-free, meaning they save £220.

In the new 2017/18 tax year, the personal allowance rises to £11,500 meaning £1,150 can be transferred to an eligible partner. As a result, married couples are able to gain a £230 tax break.

If you were eligible for the Marriage Allowance in the 2015/16 tax year, you can make a backdated claim of £212, based on the previous personal allowance of £10,600. HMRC confirms you can claim back up to four tax-years, though the scheme has only been running since April 2015.

This means that from 6 April, eligible married and civil partners can claim a total of £662.

When you apply online for the Marriage Allowance (the lower earner needs to apply), there is a section asking if you want to backdate the claim.

If you register for a personal tax account, the back payments can be paid through your bank account as a lump sum. Otherwise, it will be paid in the form of a cheque posted to the applicant.

For the 2017/18 tax year, your tax code will be adjusted if you’re in PAYE. For a self-employed applicant, this amount should be taken into consideration when you come to do your tax return.

It can take some weeks for the allowances to be altered and for tax codes to be amended so you may need to be patient.

What’s the Married Couple’s Allowance?

While similar in name, the marriage allowance is separate to the Married Couple’s Allowance. The married couples allowance 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.

For marriages before 5 December 2005, the husband’s income is used to work out Married Couple’s Allowance. For marriage and civil partnerships after this date, it’s the income of the highest earner.