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
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.
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.
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 email@example.com or call 0117 305 2600.