Marriage Allowance: Millions of couples could save up to £252 a year in tax, how to apply from HMRC

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Everything you need to know about the marriage tax allowance that could save you up to £252 a year.

The marriage tax allowance is being overlooked by millions of couples, costing them up to £252 in annual tax savings. Currently, over 2.1 million couples benefit from the tax break, which allows husbands, wives and civil partners to transfer a portion of their tax-free personal allowance to their higher-earning partner.

According to Money Week, HMRC estimates that 4.2 million couples will benefit from the tax break, suggesting that more than two million couples will miss out. Couples can backdate their claim by up to four tax years, saving up to £1,242 in total, in addition to this year’s allowance.

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Angela MacDonald, HMRC’s deputy chief executive and second permanent secretary said: “We want every eligible couple to benefit from marriage allowance tax relief. Couples whose circumstances have changed – perhaps one of them has stopped working or taken a lower paid job – may not realise they are entitled to claim.”

So, what is a marriage allowance? Here’s everything you need to know and how to apply if you’re eligible.

What is Marriage Allowance?

Marriage Allowance is a tax benefit available to some married couples that can help them pay less tax. They could save as much as £252 per year.

Couples who have retired, given up work to take on caring responsibilities, or are unable to work due to a long-term health condition may be unaware that they are eligible.

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Marriage Allowance allows people earning less than £12,570 per year to transfer up to £1,260 of their Personal Allowance to their higher-earning partner in order to reduce their tax liability.

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It is approximately 10% of an individual’s tax-free personal allowance, and the maximum amount that can be transferred is determined by the Personal Allowance for the year. This claim can be backdated to April 6, 2018, resulting in a tax relief of £1,242.

The marriage tax allowance is being overlooked by millions of couples, costing them up to £252 in annual tax savings.The marriage tax allowance is being overlooked by millions of couples, costing them up to £252 in annual tax savings.
The marriage tax allowance is being overlooked by millions of couples, costing them up to £252 in annual tax savings. | Pexels

Who is eligible for Marriage Allowance?

Couples could be eligible for Marriage Allowance if the following criteria applies:

  • they are married or in a civil partnership
  • they do not pay income tax, or their income is below the Personal Allowance of £12,570
  • their partner pays income tax at the basic rate – which typically means their income is between £12,571 and £50,270

How to apply for Marriage Allowance

To apply for Marriage Allowance, you can apply it on the Government website for free. You can search ‘Marriage Allowance calculator’ to get started. By applying on the government website rather than through a third party, you get to keep 100% of the tax relief due.

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