Are you entitled to the Marriage Tax Allowance?

It is estimated that nearly two million UK couples are eligible but yet to the claim the Marriage Tax Allowance which was first introduced in April 2015. This allows couples who meet certain criteria to transfer £1,2600 of their personal tax allowance from one partner to the other, representing a tax saving of £252.

Who is eligible for the Marriage Tax Allowance?

To be eligible for the Marriage Tax Allowance you must meet the following criteria:

• You must be married or in a civil partnership
• One partner must be a non-taxpayer i.e. they earn less than their personal allowance of £12,570 (for 2022/23)
• The other partner must be a standard rate (20%) tax payer i.e. they earn less than £43,662 for residents in Scotland (for 2022/23)
• You must have both been born on or after 6 April 1935 (if you were born before then you may be eligible for the Married Couple’s Allowance)

How does the Marriage Tax Allowance save you money?

The non-taxpaying partner can transfer £1,260 of their tax free personal allowance to their partner who pays the standard rate of tax. This means that the non-taxpayer’s personal allowance is reduced and the standard rate tax payers’ tax free allowance rises, meaning that they can save the 20% of the tax that they would be paying on the extra £1,260 – a total of £252.

The Marriage Tax Allowance can also be backdated for up to four tax years starting from when you were eligible if you did not claim in those years. Currently, the tax years that can be backdated are 2018/19, 2019/20, 2020/21 and 2021/22. This means you could be owed a total of  £1,242 if you backdated all these eligible years. The amount you may be entitled is broken down as follows:

2022/23 – £252
2021/22 – £252
2020/21 – £250
2019/20 – £250
2018/19 – £238

You can also apply for any of these individual tax years that you would have been eligible for the Marriage Tax Allowance, even if you are no longer eligible now.

If you have already applied for, and received, the Marriage Tax Allowance for last year, you will automatically be given it this year and for all future years, unless you inform HMRC that your circumstances have changed and that you are no longer eligible.

How do you apply for the Marriage Tax Allowance?

You can apply online for the Marriage Tax Allowance at gov.uk/apply-marriage-allowance. The application must be made in the non-taxpayers name and you will need:

• Both partners’ National Insurance numbers
• Proof of your identity such as:
  • the last 4 digits of the account that your child benefit, tax credits or pension is paid into
  • your passport number and expiry date
  • details from your P60
  • details from any of your 3 most recent payslips
  • the last 4 digits of an account that pays you interest

How is the Marriage Tax Allowance paid?

If you are claiming Marriage Tax Allowance for the current tax year this will be provided by an adjustment to both partner’s tax codes. Any allowance owing from previous years will be paid via a cheque.

What if I have less than £1,260 unused personal allowance?

As long as you still have some unused personal allowance, the Marriage Tax Allowance will allow you to transfer £1,260 to your partner. However you can only transfer exactly that amount. Therefore if the non-taxpayer earns £10,900 per year, but transfers £1,260 of their personal allowance to their partner that will reduce their personal allowance to £9,730 and they will have to pay standard rate (20%) tax on the amount that they earn over their tax free allowance. However the standard tax rate paying partner will still save on their tax bill, leaving a net gain for the couple.

If you are struggling with your finances and believe that you are eligible we strongly recommend that you apply for the Marriage Tax Allowance. Another important step would be to talk to the friendly experts at Scotland Debt Solutions. We have been helping people in Scotland cope with their problem debt since 1989. We can talk you through your options such as Debt Arrangement Schemes, Trust Deeds and Sequestration and work with you to get you on the path to a debt free future. Contact us on 0800 063 9250 for a free initial same day meeting.