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Taking advantage of the Marriage Allowance could save you money at a time when you most need it.
As the cost-of-living rises, you're probably looking for ways to make your income last as long as possible. One of the ways you might be able to do that is to take advantage of the Marriage Allowance.
The Marriage Allowance enables both married couples and those in civil partnership to potentially reduce their tax bill by allowing one partner to share some of their Personal Allowance with the other.
More than 2 million couples claim Marriage Allowance – can you join them?
To claim Marriage Allowance, you must be married or in a civil partnership. One partner must not be paying Income Tax or have an income below the Personal Allowance (usually £12,570). The other partner must be paying Income Tax at the basic rate (usually that means their income is between £12,571 and £50,270). Unfortunately, you're not able to claim Marriage Allowance if you're living together but not married or in a civil partnership.
If you weren't able to claim Marriage Allowance in the past, it might be that your circumstances have changed and it's worth looking into again. For example, your partner might have retired, or be taking a sabbatical. Parental Leave might also account for a change that would make you eligible.
Don't worry if you or your partner are receiving a pension, or if you live abroad. As long as you are receiving a Personal Allowance, your application for Marriage Allowance won't be affected.
If you or your Partner were born before the 6th of April 1935 then you might be better served applying for Married Couples Allowance, but you can't claim both at the same time!
What will we save?
The Marriage Allowance allows the lower earner in the couple to transfer £1260 of their Personal Allowance to their partner.
Doing so reduces the amount they are taxed on their taxable income by £252 that tax year.
Transferring a portion of your Personal Allowance to your partner means you will likely pay more tax individually, but you might save money as a couple. HMRC has a handy calculator to help you work out how much you could save.
You can also backdate your claim to include any tax years you have been eligible to claim the allowance since the 5th of April 2018 – meaning a tax refund at a time when you might need the money most. The higher earner's tax bill will be reduced based on the rates in the years you're claiming for.
So, how do I apply?
Claiming Marriage Allowance is really easy.
You can apply online or ring the Income Tax helpline for free.
You can also talk to your Accountant, who will be able to tell you if you're eligible. If you're going to apply online make sure you have your National Insurance number and that of your partner, as well as some proof of your identity, such as a p60, one of your most recent payslips or your UK passport details.
If you are registered for self-assessment, then you can apply for the allowance through your self-assessment tax return.
Once you've made a successful claim, you don't have to apply again – your claim will be automatically renewed every year. A small amount of work now could passively protect a portion of your income for years to come.
What happens if my circumstances change?
We hope that the reason you can no longer claim the Marriage Allowance is because your situation has improved for the better – say either yours or your partners income increases – but sadly there are a lot of storms a couple must weather and if things don't go as planned, you'll need to inform HMRC of the changes.
You will need to inform HMRC if:
- Your marriage ends with divorce, your civil partnership is dissolved or if you are your partner are legally separated
- If your income changes and you no longer fit the criteria
- If you simply no longer wish to claim the allowance.
If the relationship has ended then either partner can end the claim, but if you wish to stop the automatic transfer of your personal allowance for any other reason, the person who made the claim must be the one to cancel it.
If the very worst happens and your partner dies, then depending on who transferred their Personal Allowance before the death, one of two things will happen:
- If the deceased partner received the allowance transfer, then your Personal Allowance will return to the normal amount and at the same time your partner's estate will keep the increased allowance.
- If you received the personal allowance of your partner before they died, then your Personal Allowance will remain at the higher level and their estate will keep the lower allowance. The marriage allowance will then end with that tax year.
We can help
Of course, contacting your accountant or financial advisor is always recommended. Giltinan and Kennedy are here to help you make the most of your money.
If you think you might be eligible for Marriage Allowance or want to discuss your options, you can contact us today on 01403 337490 for a no-obligation chat about your circumstances.