Marriage Allowance: Are you eligible?

As the Covid-19 outbreak begins to tangibly affect personal finances, there may be some good news, as a short HMRC form could potentially result in you receiving a £1,150 cheque.

The Marriage Allowance was introduced in 2015, but recent figures reveal that only a small percentage of eligible couples have claimed. With only weeks remaining of the 2019/20 tax year, there is no better time to apply.

So, what is the Marriage Allowance? Essentially, the allowance allows a partner in a married or civil partnership couple to transfer 10% of their unused Personal Allowance to their spouse. For example, in tax year 2019/20, £1,250 could be transferred, therefore increasing the Personal Allowance from £12,500 to £13,750, creating a £250 tax saving.

So, that is £250 back in your pocket, but I mentioned a potential amount of £1,150? The good news is that HMRC allow couples, who were eligible for the allowance in prior tax years, to back date their claim to the 2015/16 tax year – The savings per year are listed below.

2019/20 – £250

2018/19 – £238

2017/18 – £230

2016/17 – £220

2015/16 – £212

In order to claim the allowance, the following criteria must be met:

• You are married or in a civil partnership
• One partner must have at least 10% of their Personal Allowance unused
• The other partner must be a basic rate tax payer. ie., for tax year 2019/20, their taxable income must not exceed £50,000

The Marriage Allowance can be claimed for all tax years in which these three conditions are met. Each year is treated separately, therefore if you are not eligible in one year, this does not exclude you from claiming for other years.

For 2020/21, the Marriage Allowance will be recognised by adjusting your tax coding notice, but for prior years, HMRC will issue a cheque.

If you would like to know more or are unsure if you are eligible, please email your usual Whiting and Partners point of contact.

Disclaimer - All information in this post was correct at time of writing.