01173052600 office@stone-co.co.uk

Claiming the marriage allowance

22nd October 2018

More than four million married couples and 15,000 civil partners in the UK are eligible for the marriage allowance in 2018/19. 

But almost half failed to claim their slice of £1.3 billion in marriage allowance cash in 2016/17, mainly down to lack of awareness.

This tax break is for couples where one partner pays the basic rate of income tax and the other is a non-taxpayer.

It came into force on 6 April 2015  and is worth up to £238 a year, and while it may not seem like a lot of money, it could cover the costs of a city break or a romantic getaway.  

How does the marriage allowance work?

Whichever partner doesn’t pay tax can reduce their personal allowance by £1,190 and transfer it to their spouse or civil partner.

This could potentially increase the taxpaying spouse or civil partner’s personal allowance to £13,040  in 2018/19. 

This tax break only applies to partners who elect to transfer a portion of their personal allowance to you and meet the following criteria:

  • you’re a basic-rate taxpayer in 2018/19
  • you have the right to claim the personal allowance (£11,850 in 2018/19)
  • you live in the UK
  • neither you nor your partner claim the married couple’s allowance.

You can only benefit from one tax reduction in any tax year.

The marriage allowance: examples

Working part-time

Jim’s on an annual salary of £16,000 and is married to Stephanie, who works part-time and earns £5,000 a year. 

Stephanie elects to reduce her personal allowance, which is transferred when Jim claims the marriage allowance. The benefit is 10% of the personal allowance rounded up to the next £10.

So the transferable amount is £1,190 in 2018/19, giving a tax saving of £238. This transfer does not impact on Jim’s national insurance contributions.

Dividends income

Ian is a director who pays himself an annual salary of £8,000 and receives a dividend payment of £30,000. His spouse, Ruth, earns £10,000 a year.

Ruth elects to reduce her personal allowance, enabling Ian to submit a claim and increase his personal allowance by £1,190. 

As Ian’s dividend income is taxed at 7.5%, the tax saved is £1,190 x 7.5% = £89.25.

Contact us

The marriage allowance forms part of our personal tax planning service, which can minimise the amount of income tax you pay. 

For more information, email us at office@stone-co.co.uk or call 0117 305 2600. 

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