But here’s a perk you might not know about. Just by being married (perk enough, am I right?), you could be entitled to around £250 a year in tax relief that only 16% of couples currently claim. That’s less than one in five of your married mates.
In 2015, HMRC introduced a ‘marriage allowance’ whereby couples in a marriage or civil partnership could pass up to £1,250 of their Personal Tax Allowance to their partner to help reduce the tax they paid overall as a pair.
In a year when many have experienced reduced hours (whether it’s been for childcare, closures or limited trade), unemployment or taken on lower-paying jobs to make ends meet, more couples than ever could benefit from this kind of tax relief.
To get back a maximum of around £1,100, claims can also be backdated by four years, meaning that you could save much, much more if your financial situation preceded the pandemic. For example, if one of you has been retraining or out of work.
This could pay off for 2.4 million households in England and Wales, HMRC estimates, yet not a lot of people know what Marriage Allowance is or how they can apply.
Here at GLAMOUR, we think an easy win for a hardworking couple is something to be celebrated, so we looked into the specifics. Here’s what you need to know:
What is a Marriage Allowance?
Marriage Allowance is a tax break available to couples under the age of 66 who are currently married or in a civil partnership.
If one partner earns less than the personal tax allowance of £12,500 per year (i.e: They don’t earn enough to pay tax) then they can transfer up to £1,250 of that allowance to the other to help reduce the tax they pay as a couple by up to £250 a year.
Even better, if you’ve been married for more than a year, you can backdate the claim to include any tax year since 5 April 2016 that you both met the below criteria.
How does it work?
Say, for example, your partner earned £11,500 a year, they wouldn’t expect to pay any tax because it’s below their personal tax allowance of £12,500.
You might currently earn £20,000 and pay tax at the basic 20% rate, so you’d expect to pay tax on £7,500 of that income.
When you claim Marriage Allowance, your partner can transfer £1,250 of their personal tax allowance to you, so your taxable income is reduced to £6,250, while they are left to pay tax on the remaining £250 of their revised £11,250 personal tax allowance.
Overall as a couple, you’d only be paying income tax on £6,500 as opposed to £7,500, saving you £200.
Who is eligible?
There are four simple criteria you must meet in order to apply for Marriage Allowance. These are:
- You were both born in or after 1955.
- You are Married or in a Civil Partnership.
- One partner earns less than £12,500 per year.
- The other partner is working and earns between £12,501 and £50,000 per year.
How much can I claim?
By transferring your tax allowance to your marital or civil partner, they could reduce their tax payments by £250 per year.
Over four years, this could amount to an impressive £1,100 tax refund. To calculate exactly how much you could save, Gov.uk has a handy tool.
After you apply, Marriage Allowance will automatically transfer to your partner every year until you cancel it or your income changes.
To find out how to apply online for Marriage Allowance, visit Gov.uk