If you’re married or in a civil partnership, you might be able to transfer part of your tax-free Personal Allowance to your partner, reducing your tax bill, also known as the Marriage Allowance, this simple move can help you keep more money in your pocket, saving up to £252 a year.
What Is the Marriage Allowance?
The Marriage Allowance allows one partner to transfer part of their unused tax-free allowance (up to £1,260) to their spouse or civil partner. This works well if:
- One partner earns less than £12,570 (meaning they don’t pay income tax).
- The other partner earns between £12,571 and £50,270, paying tax at the basic rate.
Quick Facts on Marriage Allowance
| Marriage Allowance Summary | Details |
|---|---|
| Eligibility | - Married or in a civil partnership - One partner earns below £12,570 and pays no income tax - Other partner pays tax at the basic rate (earns between £12,571 and £50,270) |
| Amount Transferable | Up to £1,260 of the lower earner's unused Personal Allowance |
| Potential Annual Savings | Up to £252 in tax savings for the household |
| Backdating Option | Can backdate claim for up to 4 previous tax years, resulting in a lump sum refund of up to £1,000 |
| How to Apply | 1. Gather National Insurance numbers and ID 2. Apply online at Marriage Allowance application page on GOV.UK 3. HMRC will confirm application |
How Much Can You Save?
With the Marriage Allowance, one partner can transfer up to £1,260 of their unused Personal Allowance to the other. This can lead to a tax saving of up to £252 per year for the household.
Tip: By transferring part of your tax-free allowance, you could save up to £252 annually as a couple!
Examples
Let’s look at how Marriage Allowance works in real life:
- Example 1: Partner A earns £10,000, and Partner B earns £30,000. Partner A transfers £1,260 of unused allowance to Partner B, reducing Partner B’s tax bill by £252.
- Example 2: Partner A has no income, and Partner B earns £35,000. Partner A transfers their allowance, resulting in a £252 tax saving for Partner B. They can also backdate this claim up to four years, receiving up to £1,000.
Key Details to Know
1. Tax Code Changes
The recipient’s tax code changes to “M,” and the transferring partner’s code changes to “N.” These codes signal the allowance transfer and will appear on your payslips and other tax documents.
2. How it Affects Other Allowances
If the higher earner’s income increases, it could impact their Personal Savings Allowance, especially for higher-rate taxpayers.
3. Using Other Tax Reliefs
Marriage Allowance can be combined with other reliefs, like the Blind Person’s Allowance, maximizing potential savings.
4. Claiming for a Deceased Partner
If your spouse or civil partner has passed away, you can claim the Marriage Allowance for up to four previous years, which may result in a tax refund.
5. Self-Employed Eligibility
Self-employed individuals can benefit too! If your income varies, review your eligibility each year to ensure you’re making the most of this allowance.
How to Apply for Marriage Allowance
Applying for the Marriage Allowance is easy and can be done online. Here’s how:
- Gather Information: Have both partners' National Insurance numbers and identification ready.
- Visit GOV.UK: Go to the Marriage Allowance page.
- Complete the Form: Fill in your details and submit.
- Receive Confirmation: HMRC will confirm your application, and your tax codes will adjust.
Backdating Tip: You can backdate your claim up to four previous tax years, potentially resulting in a refund of up to £1,000.
Frequently Asked Questions
Q: Can I apply if my partner works part-time?
A: Yes, as long as they earn below £12,570 and don’t pay tax.
Q: What if our income changes?
A: Inform HMRC, as it may impact your eligibility.
Q: Can we cancel the Marriage Allowance?
A: Yes. Contact HMRC to update your tax codes.
The Marriage Allowance is an easy way to keep more of your money. If eligible, consider transferring your unused allowance to save up to £252 each year.
To contact HM Revenue and Customs (HMRC) for general inquiries or to discuss the tax-free allowance, you can use the following phone numbers:
- Within the UK: 0300 200 3300
- Outside the UK: +44 135 535 9022
These lines are open Monday to Friday, from 8 am to 6 pm, and are closed on weekends and bank holidays.
Make sure you have your National Insurance number ready when you call, as it will help speed up your inquiry. For more specific contact details related to particular tax services or departments, you can visit the official HMRC contact page
If you found this article useful, here are a few other articles you may find helpful:
- Autumn Budget 2024: Key Payroll & HR Updates for SMEs
- What Business Expenses Can I Claim? An Employers Guide
- Tax Rates and Thresholds for the 2024/25 Tax Year
If you need help with anything discussed in this article, or would like to discuss your payroll, get in touch for a no obligation chat. We're here to help.
