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What is marriage allowance?

Marriage isn’t just about love. It’s an opportunity to unlock financial benefits like Marriage Allowance.

How does Marriage Allowance work?

Marriage Allowance is a tax relief scheme designed to ease the tax burden on married couples or individuals in a civil partnership. It allows you to transfer 10% of your Personal Allowance to your husband, wife, or civil partner.

The Personal Allowance is £12,570 in the 2023/24 tax year – this is the amount of tax-free income an individual can receive during the year. This scheme can reduce the tax bill of the receiving partner by up to £252 in the tax year!

Who qualifies for Marriage Allowance?

To benefit from Marriage Allowance, the following criteria must be met:

  • You and your partner are recognised as legally married or in a civil partnership.
  • The partner transferring their allowance must earn less than their Personal Allowance of £12,570 during the tax year.
  • The receiving partner must earn income between £12,571 to £50,270 during the tax year, paying income tax at the basic rate.

You cannot claim Marriage Allowance if you’re living together but you are not married or in a civil partnership.

What is an example of claiming Marriage Allowance?

  1. The lower income partner does not pay tax as they earn £11,500. The higher income partner pays tax at the basic rate as they earn £20,000 and therefore has taxable income of £7,430.
  2. The lower income partner transfers £1,260 of their Personal Allowance to the higher income partner.
  3. The lower income partner’s Personal Allowance becomes £11,310 and the higher income partner gets a ‘tax credit’ on £1,260.
  4. This means the lower income partner will now pay tax on £190, but the higher income partner will only pay tax on £6,170. As a couple you are only paying Income Tax on £6,360 rather than £7,430, which saves you £214 in tax.

You can calculate how much tax you could save on this link here : https://www.gov.uk/calculate-married-couples-allowance/y

Can I backdate my Marriage Allowance claim?

Yes! Couples can backdate their Marriage Allowance claim for up to 4 years – from the 5th April 2020.  If your claim is accepted, your partner’s tax liability will be reduced according to the relevant Personal Allowance rates during those years.

Can I stop my Marriage Allowance claim?

Yes! You can cancel your Marriage Allowance at any time if you no longer meet the eligibility, or if your circumstances such as your marital status or income levels change. Your marriage allowance will be transferred automatically to your partner each tax year until you cancel it.

By taking advantage of this allowance, you and your partner can optimise your tax position by reducing your overall tax bill, allowing you to put more money back into your pockets for the things you love the most.

If you would like to find out more about Marriage Allowance and how you can benefit, please contact us to explore this further.