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Married couples: check if you’re eligible for an up to £900 tax break

Written by: Paloma Kubiak
Eligible married partners can receive a £238 tax break this year, but as claims can be backdated this means couples could receive a total of £900 via the Marriage Allowance.

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.

However, if you ‘earn’ more than the personal allowance, say through savings interest or dividends, the Chartered Institute of Taxation urges people not to be deterred from checking their eligibility or applying. See ‘You can earn more than you think and be eligible for the Marriage Allowance’ for more.

Around four million married and civil partner couples are eligible for the tax break but HM Revenue & Customs (HMRC) reported last year that less than half were benefiting. As a result, couples could be missing out on more than £1bn of savings.

Here’s how the Marriage Allowance works and how you can backdate claims…

How to claim the Marriage Allowance

You both need to be born on or after 6 April 1935 and you can’t be a higher or additional rate taxpayer. An individual earning less than the personal allowance can transfer 10% of their personal allowance to their husband, wife or civil partner, as long as the recipient is a basic rate taxpayer.

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.

In November’s Budget, the Chancellor, Philip Hammond announced that the personal allowance would rise to £11,850 in the 2018/19 tax year, 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 recipients gets £238.

However, the Marriage Allowance can be backdated up to four tax years, so eligible couples can also make the following claims:

  • 2017/18 tax year: the personal allowance was £11,500 so £1,150 can be transferred, resulting in a £230 tax break.
  • 2016/17 tax year: the personal allowance was £11,000 so £1,100 can be transferred, resulting in a £220 tax break.
  • 2015/16 tax year: the personal allowance was £10,600 so £1,060 can be transferred, resulting in a £212 tax break.

If you were eligible for all the four tax years, you will be able to claim a total £900 tax break.

In order 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, for instance.

Once the Marriage Allowance has been claimed, both partners (if under PAYE) will receive a different tax code so that the Marriage Allowance is reflected such as with the codes ‘M’ and ‘N’.

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 the death of the other partner.

If you want to make a back-dated claim, there will be a section in the online application. 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.

At the November Budget, Hammond also announced that the Marriage Allowance can be extended to surviving spouses.

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