What is the Marriage Allowance, and how do I claim it?
The Marriage Allowance is a tax benefit in the UK that allows certain married couples or civil partners to transfer a portion of their unused personal allowance to their spouse or partner, potentially reducing their combined tax bill. Here’s how it works, who qualifies, and how to claim it.
1. What is the Marriage Allowance?
- Personal Allowance Transfer: The Marriage Allowance lets one partner transfer up to 10% of their personal allowance to the other. For the 2023/24 tax year, this amount is £1,260, which could reduce the other partner’s tax bill by up to £252.
- Effect on Tax Bill: By transferring this allowance, the higher-earning partner has more of their income tax-free, which reduces the total income tax due for the couple.
2. Who Qualifies for the Marriage Allowance?
To qualify for the Marriage Allowance, you must meet these criteria:
- Married or in a Civil Partnership: You must be legally married or in a civil partnership to be eligible. Unmarried couples, even those living together, do not qualify.
- Income Requirements: One partner must have an income that’s less than the Personal Allowance (currently £12,570), meaning they pay no income tax. The other partner must be a basic-rate taxpayer, earning between £12,571 and £50,270.
- Non-Taxpayer and Basic-Rate Taxpayer: The Marriage Allowance does not apply if the higher earner is in the higher-rate tax bracket (earning above £50,270) or if both partners are non-taxpayers.
3. How Much Could You Save?
- For the 2023/24 tax year, the partner with the lower income can transfer £1,260 of their personal allowance to the higher-earning partner.
- The higher earner then gets an additional £1,260 of tax-free income, which can reduce their tax bill by up to £252 (20% of £1,260).
- This allowance can also be claimed retrospectively, up to four previous tax years, if you qualified but didn’t claim it. This means potential savings of up to £1,242 if you claim for the maximum backdated period.
4. How to Claim the Marriage Allowance
- Online Application: The easiest way to apply is through the official HMRC website. The partner with the lower income must apply, and they’ll need both partners’ National Insurance numbers and one form of ID (such as a passport or payslip).
- Through Self-Assessment: If you already complete a self-assessment tax return, you can claim the Marriage Allowance when you fill out your return. This can be done by including the relevant information on your return form.
- Phone Application: If you cannot apply online, you can contact HMRC directly at their helpline number and request to apply for the Marriage Allowance over the phone.
5. How the Marriage Allowance Works in Practice
Once HMRC processes your application, they’ll adjust both partners’ tax codes. The higher earner’s tax code will increase, reflecting their additional allowance, while the lower earner’s tax code will decrease.
6. How Long Does It Last?
- Automatic Renewals: The Marriage Allowance continues each year automatically, as long as you and your partner remain eligible. If your circumstances change (e.g., income levels increase or decrease significantly), you should inform HMRC to stop or adjust the allowance.
- Stopping the Allowance: If you become ineligible, such as if one partner becomes a higher-rate taxpayer, you can stop the Marriage Allowance by contacting HMRC.
7. Common Questions about the Marriage Allowance
- What if our circumstances change? If either partner’s income changes, or if you divorce or dissolve the civil partnership, you should inform HMRC to avoid incorrect allowances.
- Can you backdate a claim? Yes, you can backdate the Marriage Allowance for up to four tax years, potentially receiving hundreds in backdated tax relief.
- What if both partners have similar incomes? The Marriage Allowance is only beneficial if one partner has unused personal allowance (i.e., earns below £12,570) and the other is a basic-rate taxpayer.
Summary
The Marriage Allowance is a valuable tax relief for qualifying married couples or civil partners in the UK, allowing one partner to transfer part of their unused personal allowance to reduce the other’s tax bill. It’s simple to apply online or through self-assessment, and it can provide ongoing tax savings as long as eligibility requirements are met. For those who haven’t claimed it yet, backdating offers an opportunity to recoup past tax relief.
