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Readers Question: Can I use my spouse’s tax allowance?

The first £12,500 of any income we earn is free of income tax, then the next £37,500 is tax at 20% and the following £100,000 taxed at 40% after this you pay 45% income tax.  In addition to these rates, you will also pay National Insurance contributions of 12%, if you are under State Pension Age.

What seems unfair is that if one of you in a marriage, or civil partnership, stays at home and does not have any earnings, then their £12,500 of tax-free allowance is left unused.

However, since April 2015, if one of you is a non-tax payer and the other a basic rate tax payer i.e. earning less than £50,000pa, then the non-tax payer can transfer 10% or £1250 of their personal allowance to the basic rate tax paying partner to increase their allowance, this will save them up to £250pa of income tax.

If this is something that you have not arranged in the past, you have until the end of April 2020 to claim back the four years to when the allowance was introduced.

The personal allowance has changed each year since 2015/16 and claiming the full marriage allowance for each of the past four years, plus the current year could save you £1,149 of income tax.

How to claim the refund

The person giving up part of their personal allowance needs to make the claim and at the same time, can make claims for earlier years also.

You can make the claim using the Gov.uk website (https://www.gov.uk/apply-marriage-allowance).  You will need your National Insurance number and prove your identity, such as by giving details from your P60, payslips, passport or child benefit when you apply, and you will also need the National Insurance number of your spouse or civil partner.

If you cannot claim online, you can telephone HMRC on 0300 200 3300 or write to them to make the claim.

For prior years, you will receive a refund cheque from HMRC. For the current tax year and going forward, your own and your spouse or civil partner’s tax codes will be amended. For the self-employed, the marriage allowance will be dealt with as part of the Self Assessment tax return.

 
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