The Allowance was introduced on April 6, 2015, with the amount increased in the 2016 Budget.
Here’s how it works…
What is the Marriage Allowance?
The Marriage Allowance was first announced in 2013, and details were published in the 2014 Budget before its introduction in 2015. Here’s where you go to register to receive it.
It essentially allows you to transfer some of your tax-free personal allowance across to your partner, or for your partner to transfer some of theirs to you, so that you as a couple can reduce the amount of tax you pay.
How does it work?
From the start of the new tax year on April 6 2016, everyone has a personal allowance of £11,000.
If you or your partner doesn’t pay tax – so one of you is either not earning at all, or is earning below this £11,000 threshold – then they or you can transfer up to £1,100 of the relevant allowance across to the other.
Say, for example, your spouse or partner earns £5,000 a year doing part-time work, then they’ll still have £6,000 of their personal allowance left over.
This means they can then transfer £1,100 of this to you, bumping up your total tax-free allowance to £12,100. And that means you won’t be charged basic rate tax at 20% on the bit extra, which is equivalent to a saving of £220 a year (20% of £1,100).
Can all married couples/civil partners take advantage of this then?
No, it’s only possible to transfer some of your personal allowance across to a partner or spouse if they don’t pay more than the basic rate of income tax.
That means from April, they must be earning between £11,001 and £42,999 a year to qualify. If they are a higher rate taxpayer earning more than this amount, you won’t be allowed to transfer any of your allowance across.
Are there any other rules?
Yes, to be eligible, both of you must have been born on or after April 6, 1935.
If either of you was born before this date, you can claim the Married Couple’s Allowance instead.
How many people will qualify?
More than 4 million married couples and 15,000 civil partnerships will be eligible for this tax break.
Where can I apply?
HMRC will get in touch with you and invite you to apply. You can register at any point in the tax year and still get the full benefit of the allowance.
How do I get the money?
Whoever receives the allowance, whether it’s you or your partner, will get the money in their pay packet each month.
Your or their tax code will have been altered to take account of the bigger personal allowance.
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