The government introduced the Marriage Allowance scheme in 2013 to give married couples and civil partners income tax relief. It enables them to reduce their 2019/2020 tax bill by up to £250. The Marriage Allowance is particularly beneficial to people who are on maternity leave, retired, stay-at-home parents, self-employed, unemployed or work part-time.
If you or your partner is a non-taxpayer (usually meaning you earn less than £12,500) and the other is a starter / basic / intermediate rate taxpayer (in Scotland this usually applies to people who earn between £12,500 and £43,430), then you can benefit from the Marriage Allowance.
Provided these conditions are met, you can transfer up to £1250 of your unused Personal Allowance* to your partner. This will give them £13,750 (£12,500 + £1,250) of tax-free earnings.
* Personal Allowance is the first £12,500 of income that a person earns per annum that is untaxed.
To illustrate this with an example, John earns £5000 per year and his wife, Mary, earns £35,000. John has not reached his total Personal Allowance and is therefore able to transfer £1,250 of that allowance to Mary. This increases her Personal Allowance to £13,750. This means that Mary is no longer paying tax at 20% on the additional £1,250, saving her £250.
If you have not claimed this allowance before you can get a rebate of up to four years (which can total up to £1,150 – the sum of the previous years’ allowances). This rebate will happen automatically when you claim. This does not need to be applied for every year; it will transfer automatically until you cancel the allowance or your circumstances change (i.e. divorce / salary change).
The lowest income earner (who would transfer some of their Personal Allowance) can make the application for Marriage Allowance online.
Upon the success of your application, if your new Personal Allowance is lower than your income (as the amount that can be transferred is exactly £1,250 – no more, no less), you might now have to pay some income tax. However, it may still be beneficial to you as a couple to take advantage of the Marriage Allowance.
Be careful not to get this confused with the Married Couple’s Allowance which only applies to couples where one or both partners were born before 06/04/1935.
You can find more information and begin an application here: https://www.gov.uk/marriage-allowance
For more information relating on similar topics, visit the Personal Tax section of our website.
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