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For assistance please get in touch with your main contact directly or email our covid19help@armstrongwatson.co.uk. Alternatively if you wish to talk to us, please call 0808 144 5575.

Married Couple

Are You Entitled To The Marriage Allowance?

Millions of couples who are entitled to a claim the marriage tax allowance are missing out on a potential tax saving of up to £250 per annum. Many couples are still unaware of this tax break for married couples and those in civil partnerships which came into effect on 6 April 2015. More than 1.78 million already benefit from the allowance but it is estimated that more than 2 million are missing out.

The Marriage Allowance currently lets you transfer £1,250 (equivalent to 10%) of your Personal Allowance to your husband, wife or civil partner. In order to benefit one of you needs to earn less than £12,500 and the other one must not be liable to income tax above the basic rate. Couples where one of you is a higher or additional rate taxpayer are not eligible for the allowance.

If you meet the conditions then the one earning less than £12,500 can transfer £1,250 of their Personal Allowance to the other one. Assuming that the transfer is made to someone who will fully use their own Personal Allowance and pay basic rate tax on at least £1,250 of their income, a tax saving of £250 will be made by them. You can only transfer £1,250 of your Personal Allowance even if the unused amount is greater than this. If the unused amount is less than £1,250 there will still be an overall tax saving for the couple by making the transfer but just not as much.

For example Janet works part-time earning £8,500 per annum. Her Personal Allowance is £12,500 and therefore she has more than enough unused allowance to transfer £1,250 to her husband. Janet’s husband John is employed full-time on a salary of £30,000 and is a basic rate taxpayer. If Janet makes the transfer John’s Personal Allowance is increased to £13,750 saving him tax of £250. 

Once you have applied to transfer the allowance it will remain in force for future years until you cancel it or your circumstances change.

Claims can be backdated four years to the 2015/16 tax year potentially increasing the total tax saving to £1,150.  After 5th April 2020 retrospective claims will only be possible back to 2016/17 so if you haven’t claimed before now is the time to claim a tax refund from HMRC.

Access the Married Couple’s Allowance calculator to work out how much you could save.

You can apply online at www.gov.uk/apply-marriage-allowance or phone the HMRC helpline on 0300 200 3300. 

Please note you will need both you and your partner’s national insurance numbers and the person making the transfer will also need to prove their identity. This can be the last 4 digits of the account that your child benefit, tax credits or pension is paid into, the last 4 digits of an account that pays you interest, details from your P60 or payslips or your passport number and expiry date. 

If you’d like more information about our tax planning services, get in touch by calling 01768 222030 or email me at graham.arnott@armstrongwatson.co.uk.

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