Government Marriage Allowance

It is often said, often tongue in cheek, that there are few advantages to being married these days. Thankfully, this is not strictly true, especially where tax is concerned. One advantage is the marriage allowance that so many couples tend to be unaware of.  

The allowance is particularly beneficial where one partner is a basic rate tax payer (typically earning between £12,500 and £50,000 gross per annum) and the other partner earns below the minimum tax band (which is currently set at £12,500). It does not matter whether the higher earner is employed or self-employed; the eligibility criteria is the same.

Here is how it works: the lower earner can transfer fair tax liability (of up to £1,250) to the higher earner. This means that the high earner doesn't start paying tax until they are earning £15,000; thus, saving them up to £250 per year in tax.

It can be claimed whether you're married or in a civil partnership; even if you are claiming a pension.

It is worth noting that if you were born before 6 April 1935, the married couples allowance may be more beneficial to you.

You don't need to worry if you think you have missed out on this and you are eligible: the allowance can be back dated to April 2015. You can claim for this.

The lower earner can arrange the allowance by changing their tax code on their self-assessment return; it will automatically be applied until you advise you no longer require it.  

As you would expect, if the lower earner earns more than the £12,500 limit, they may be liable for tax; however, this could still be beneficial.

So, if you are married or in a civil partnership, then don't hesitate to contact Inland Revenue and see if you are eligible. You have nothing to lose by applying.

June 2019