Marriage Tax Allowance – What Is It?
As you may be aware the Government has introduced a tax break called the Marriage Tax Allowance, but what is it?
The allowance, which came into effect from 6 April 2015, is available to couples who are married or in a civil partnership and enables a transfer of a proportion of their tax free personal allowance between them.
The transferable amount for 2016/17 is set at £1,100 (10% of the personal allowance) and will change each year as the personal allowance increases.
To be eligible to claim you must:
- Be married or in a civil partnership,
- One of you needs to be a non-taxpayer (which usually means earning less than the personal allowance),
- The other person needs to be a basic rate (20%) taxpayer, and
- You must both have been born after 6 April 1935 as there is a different tax allowance for couples where one partner is born before this date.
HMRC have stated, however, that to date fewer than 1 in 10 eligible couples have applied for the tax break. It is thought that this might be because many people simply aren’t aware of the new allowance or that it can be quite time consuming to claim for the tax break, which is worth £220.
An application for the Marriage Tax Allowance is a straightforward process and once in place the election will remain until one of you cancels the election or your circumstances change e.g. because of divorce or you become a higher rate taxpayer.
Where both partners have already filed a self assessment tax return, the claim to transfer can be made when completing their self assessment tax returns.
Alternatively the non-taxpayer can apply online to transfer their allowance and HMRC will include the additional personal allowance in the partner’s tax code. Where the partner does not have a tax code, i.e. where they are self employed, the additional personal allowance can be included in their self assessment tax return for the year to reduce their tax liability.
Should you wish to take advantage of this tax break go to https://www.gov.uk/marriage-allowance