What is marriage tax allowance and who can claim it?
If you're married or in a civil partnership, did you know you can save tax with the marriage allowance? Don't delay if you were eligible in 2017/18 as you will need to claim by 5 April. Trisha Doan explains more.
One way a couple can reduce their tax liability is by claiming a marriage allowance. If you are married or in a civil partnership, one of you can transfer 10% of your tax-free allowance to your partner. As an example, if you were to earn £10,000 and your spouse earns £25,000, they would have a taxable income of £12,430. This would leave them with a tax liability of £2,486 when taxed at the 20% basic rate. However, if you were to transfer your allowance to your partner, they will have a new taxable income of £11,170. When taxed at the 20% basic rate, this would give them a new tax liability of £2,234. The benefit of doing this is so that you can reduce your tax liability as a couple by saving up to £252 for the year.
Backdating your claim:
In addition to claiming the current year's allowance, you can also backdate your claim by up to four tax years. The amounts for each year are worth up to:
- 2021/22 - £252
- 2020/21 - £250
- 2019/20 - £250
- 2018/19 - £238
- 2017/18 - £230 (The deadline to claim for this year is 5 April 2022. After this, the furthest you will be able to claim by will be up to 2018/19)
To claim the marriage allowance for the previous years, you will both need to meet the criteria for each tax year that you apply for. If you do claim for this tax year and are able to backdate the maximum four years, this could save you up £1,220.
Eligibility:
- You need to be married or in a civil partnership
- One of you needs to be a non-taxpayer (earning less than £12,570)
- The other partner needs to be a basic 20% rate taxpayer (earning less than £50,270)
- You need to have both been born after 6 April 1935
You do not have to apply every year as once you make a claim, they are automatically renewed every year. To apply for the Marriage Allowance, the non-taxpayer will need to either apply online to HMRC on the GOV.UK website or by calling 0300 200 3300.
If you would like to discuss tax planning, please contact us on 0115 955 5500 or email enquiries@pagekirk.co.uk.