Although most people marry for love, and without wishing to sound horribly unromantic, there are also financial benefits to getting hitched.
One of these is the opportunity (if you’re eligible) to reduce your income tax bills. If you’re married or in a civil partnership, you may be eligible to apply for one of two benefits; Marriage Allowance or Married Couple’s Allowance. Individual circumstances such as how much you each earn and when you were born, will determine your eligibility.
Marriage Allowance
If you’re married or in a civil partnership, the Marriage Allowance means that you might be able to transfer around 10% of your personal allowance to your partner, if you meet the eligibility criteria. Your personal allowance is the amount you can earn before you start paying tax, which this year is £12,570.
Through the Marriage Allowance, if either you or your spouse earns less than this, the lower earning person can transfer up to £1,260 of their personal allowance to the higher earning individual. This effectively increases the higher earning person’s personal allowance to £13,830, which could save them up to £252 in tax payments each year.
To be eligible for Marriage Allowance you’ll need to meet the following criteria:
- You’re married or in a civil partnership and are not currently receiving Married Couple’s Allowance.
- One of you is not liable to pay tax because you earn less than the personal allowance of £12,570, whilst the other is a basic rate tax payer, earning between £12,571 to £50,270.
- You were born after 6 April 1935. Anyone born before this date may be able to claim Married Couple’s Allowance instead.
The partner receiving the transfer will usually have their tax code changed to ‘M’, to show they are receiving Marriage Allowance from their spouse. If the partner who made the transfer is employed, then their tax code will change to ‘N’, to show that they chose to use the Marriage Allowance.
If you think you may be eligible for Marriage Allowance, you can apply to HMRC online, or by phone on 0300 200 3300.
Making a Marriage Allowance claim for previous years
You can back date claims for Marriage Allowance by up to four years, so you can currently claim as far back as 5 April 2018. However, you must meet the criteria for each year that you wish to receive Marriage Allowance for. And it’s important to remember that the threshold for non-tax payers and basic rate taxpayers is different according to the tax year you’re claiming for, so your allowance may not be the same every year.
Claiming Marriage Allowance if your partner has died
You can still apply for Marriage Allowance if your partner died after 2015 and you meet the other criteria for Marriage Allowance.
Under these circumstances, you’ll be applying for a backdate of the benefit, so you’ll get the benefit as if you had applied for it from April 2015. The benefit amount will be worth up to £1,150 but you can only get payments for the years which you were both alive.
Married Couple’s Allowance
Couples who were born before 6 April 1935 may be able to claim the Married Couple’s Allowance rather than the Marriage Allowance. This means that the highest earner in the couple will receive 10% off their income tax.
If you got married before 5 December 2005, it will be the husband’s income that will be used to work out how much Married Couple’s Allowance you’ll receive – although this can be transferred to the wife. For any couples who got married after this date, it will be the income of the partner with the highest earnings which will be used to calculate the benefit amount.
Although the highest earner will get 10% off their income tax, there are upper and lower limits for the amount of tax relief that can be claimed and for how much can be earned. This means that for the tax year 2019/20 you could cut your tax bill by between £345 and £891.50.