Marriage Allowance – Are you paying too much tax?

Are you making the most of your tax allowance? 

Are you married or in a civil partnership?

Register of Marriages

I hope you don’t mind the question, but if you are married or in a civil partnership you could save yourself some money by paying a little less tax.

The government introduced the Marriage Allowance from 6th April 2015, and is not to be confused with the Married Couples Allowance that can only be claimed if you were born before 1935.  So most of us are not quite old enough to qualify for this but if you are married you might be able to pay a little less tax.

The Marriage Allowance is in place to help couples to be more tax efficient with their combined earnings, and although it has been in place for several years it is thought that 1 million couples are missing out on this tax saving which could now be worth up to £1,220.

Are you eligible?

You will be eligible to claim the Marriage Allowance if you can meet all of the criteria:

  • Are married or in a civil partnership
  • One partner earns less than the personal allowance, currently £12,570 for the 2021-22 tax year
  • The other partner pays income tax at the basic rate, currently less than £50,270 (values in Scotland differ)
  • And both born after 6th April 1935

So how does it all work?

As standard everyone gets a tax free annual allowance, for the 2021-22 tax year this is £12,570.  This means that you can earn up to this amount without having to pay any tax to the government.  Anything above this is subject to tax.With the Marriage Allowance the lower earning partner can transfer 10% (£1,257) of their allowance to their spouse, this means that they will pay less tax on their earnings and over the 2021-22 tax year would save £251.40, the equivalent to a sneaky coffee on the way to work once a week, or a night out at the cinema (once we are allowed) each month or even the cost of networking membership.

The higher earners Personal Allowance increases from £12,570 to £13,827 and the lower earners Personal allowance decrease to £11,313.  If you are unsure if your code has already been adjusted to allow for Marriage Allowance have a look at the last letter of your tax code, under typical circumstances a tax code ends with a ‘L’, for those receiving the allowance this will end with ‘M’ and for those transferring the allowance it will end with ‘N’.

How to apply for the Marriage Allowance?

The person on the lower income must apply to transfer part of their allowance to their partner, and the application only takes a few minutes online at https://www.gov.uk/apply-marriage-allowance  

You will need:

  • Your National Insurance number
  • Your partners National Insurance number
  • Proof of ID such as passport or UK driving license.

Once applied for the Marriage Allowance automatically rolls over to the new tax year so it is important to tell HMRC if your circumstances change.

The Marriage Allowance can be backdated up to 4 full tax years, so if you have not claimed and you are entitled you could receive a cheque back from HMRC for £968.

You would still be entitled to claim Marriage Allowance even if one or both of you are self employed, provided the earnings criteria are met then you would qualify and you can claim through your self-assessment tax return.

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