Marriage Allowance – who is eligible for this £252/year tax break?

Are you one of the millions of people who are eligible to claim the Marriage Allowance, but haven’t done so yet? Here we explain how this allowance – worth £252 per year – works, and how to claim it.

Interestingly, in responding to a recent Freedom of Information request, HMRC says that just 2.2m of the 4.4m people eligible to claim the allowance have done so since its introduction in 2015.

This may be due to a lack of public awareness, as well as a complicated application process (which has since been simplified).

What is the Marriage allowance?

The allowance, first introduced by the Coalition Government, can be claimed by married couples, or those in a civil partnership.

The measure allows couples to transfer up to 10% of one partner’s income tax personal allowance to the higher-earning partner each year – £1,260 in 2023/24 for example. This can result in an income tax cut for the higher earner of up to £252.

Are you eligible?

Your eligibility depends entirely on how much you earn.

A fair proportion of contractors are higher-rate taxpayers, so will be ineligible, but there may be tax years where this isn’t the case.

The allowance can only be transferred if a) One partner has an income of £12,570 or less, and b) The other partner is not a higher or additional tax rate payer – earning no more than £50,270 during 2023/24.

So, to be eligible, one partner must be a non-taxpayer, the other a basic rate taxpayer.

The non-taxpayer must transfer exactly 10% of the prevailing personal allowance for the tax year in question.

Of course, there may be instances where the non-taxpayer has already used a chunk of their personal allowance, and the 10% transfer tips them over the edge of the £12,570 threshold, meaning they will end up being taxed on the difference!

How do you apply for the allowance?

The non-taxpaying partner can apply for the marriage allowance online, and transfer 10% of each year’s personal allowance to the other partner.

Make sure you have the following details to hand before you start the application process:

• National Insurance numbers – for you and your partner.
• Proof of your identity, such as payslip details, your P60, passport details, or the bank account number where you receive child benefit, tax credits or a pension.

How does your personal allowance get transferred?

Assuming your application is successful, HMRC will provide your spouse/partner with the extra allowance by changing their tax code, or when they submit their Self Assessment Tax Return (SATR).

Once it has been processed (HMRC says this can take up to 2 months), the change will be backdated to the start of the current tax year.

You can backdate your claim, and get £1,256!

If you are eligible to claim the allowance, you can also backdate your claim to include up to 4 previous tax years!

In 2019-20, the allowance was worth £250. In the following 3 tax years, it was worth £250, £252, and £252.

So, assuming you’ve not made a previous claim to date, you could be in line for a tax break of £250 + £250 + £252 + £252 = £1004 + your claim for 2023/24 (£252). This gives a total claim of £1,256

How long can you claim the Marriage Allowance?

HMRC will continue to pay the allowance unless you inform them that your circumstances have changed – if you get divorced, or your civil partnership is dissolved, or if your partner/spouse dies.