Married couples and people in civil partnerships could be owed more than £1,200 as HM Revenue and Customs (HMRC) has said.
HMRC is encouraging those eligible to sign up for Marriage Allowance to reduce their tax bill and receive a welcome financial boost the Valentine’s Day.
Marriage Allowance allows married couples or those in civil partnerships to share their personal tax allowances if one partner earns an income under their Personal Allowance threshold of £12,570, and the other is a basic rate taxpayer.
Eligible couples can transfer 10% of their tax-free allowance to their partner, which is £1,260 in 2021/22. It means couples can reduce the tax they pay by up to £252 a year.
Couples can apply any time, backdate their claims for any of the four previous tax years and receive a payment of up to £1,220 at a time when they need it most.
Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said: “Couples could be sitting on a tax relief worth up to £1,220 that could provide vital financial support at a time they need it most. To find out if you are eligible and how to apply search ‘Marriage Allowance’ on GOV.UK.”
What is the Marriage Allowance?
The Marriage Allowance enables you to transfer 10 per cent of your tax-free allowance, which is £1,260 in 2021/22, to your husband, wife or civil partner, thereby reducing their tax bill by up to £252 per year.
To benefit you as a couple, the lower earner must normally have an income that is below their Personal Allowance threshold of £12,570.
If you transfer some of your Personal Allowance to your partner, you may have to pay more tax yourself. However, you could still pay less collectively as a couple.
To work out how much tax you could save together, there is an online calculator on the government website.
Who is eligible to claim it?
To claim the Marriage Allowance, you must meet the following criteria:
- you are married or in a civil partnership
- you do not pay Income Tax or your income is below your Personal Allowance (usually £12,570)
- your partner pays Income Tax at the basic rate, which usually means their income is between £12,571 and £50,270 before they receive Marriage Allowance
You cannot claim Marriage Allowance if you are living together but you are not married or in a civil partnership.
For those who live in Scotland, your partner must pay the starter, basic or intermediate rate, which usually means their income is between £12,571 and £43,662.
It will not affect your application for Marriage Allowance if you or your partner are currently receiving a pension, or live abroad, providing you get a Personal Allowance.
Couples who have experienced a change in their circumstances could now be eligible to claim the allowance. These changes may include:
- A recent marriage or civil partnership
- One partner has retired and the other remains working
- A change in employment due to Covid-19
- A reduction in working hours which means earnings fall below Personal Allowance
- Unpaid leave or a career break, or one partner is studying or in education and not earning above their Personal Allowance
If your partner has died since 5 April 2017 you can still claim by contacting the Income Tax helpline.
Marriage Allowance claims are automatically renewed every year, but couples should notify HMRC if their circumstances change.
How to apply
Couples who are eligible can apply for the Marriage Allowance on the government website.
If you cannot apply online, you can apply for Marriage Allowance via Self Assessment if you are already registered and send tax returns, or by writing to HMRC.
If both of you have no income other than your wages, then the person who earns the least should make the claim.
If either of you has another source of income, such as dividends or savings, you may need to work out who should claim. You can call the Income Tax helpline if you are unsure.
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