Marriage Tax Allowance Explained
As of April 6th 2015, couples have been able to register for the new Marriage Tax Allowance also known as the marriage allowance.
The marriage tax allowance allows the transfer of £1,260 of your personal allowance to your spouse or civil partner, provided they have a higher income than you.
A successful marriage tax allowance claim results in a reduced tax bill for the higher income earner.
Not all partnerships are eligible to submit a marriage allowance application, so it’s advisable to verify your qualification before attempting to lodge a claim with HMRC.
It’s reported there are around 15,000 civil partnerships and 4 million marriages that could potentially benefit from the useful £252 annual tax saving.
That’s just £252 per tax year so if you’ve not claimed the marriage tax allowance in the past you can back date it for four tax years and get a tax rebate.
Who can claim the Marriage Tax Allowance?
You can apply for the Marriage Tax Allowance if:
- You are in a civil partnership or marriage.
- You were both born after 6th April 1935.
- One member of the couple earns between £12,571 and £50,270 therefore paying the basic rate of income tax.
- One member of the couple earns less than £12,570 therefore not paying any income tax at all and not using their full Personal Allowance.
The earning parameters can change for previous tax years and change each tax year moving forward pending announcements made in the governments budget.
Can I transfer the Marriage Tax Allowance?
Transferring marriage allowance is beneficial and means the non taxpayer can transfer up to 10% of their unused Personal Allowance to their basic rate taxpaying partner.
As an example for the tax year 2015-2016 the Personal Allowance is £10,600, so you can transfer up to £1,060. It is worth remembering that ‘income’ includes wages, pensions and savings (excepting your £5,000 tax free savings interest).
The taxpayer then has their Personal Allowance increased to a maximum of £11,600, seeing a 20% tax saving of £212 incorporated into their tax code or as a reduction in their self-assessment payment.
As long as the lower earner only earns up to the tax free personal allowance in the year of the claim, then the higher earner can receive the full allowance and the entire £212 tax saving.
Marriage Tax Allowance example
Lucy and Ella are in a civil partnership and were both born after April 6th 1935.
Lucy earns £6,000 working part time in the local library. As her full Personal Allowance is £10,600, they can apply to have £1,060 transferred over to Ella.
Ella is a marketing consultant, earns £35,000 and pays basic rate income tax. Her Personal Allowance can now be increased by Lucy’s additional £1,060 transfer to £11,660 giving them a saving of £252.
How do I get paid the Marriage Allowance?
You will receive the allowance through paying less tax in your salary each week or month. Your employer will know to deduct less tax because you will be given a new tax code which will be higher because of the marriage allowance.
If you are transferring the allowance, your partner’s tax code will be changed accordingly.
You will normally see the letter M appear at the end of your tax code which indicates that you are in receipt of the marriage allowance.
Backdate your Marriage Tax Allowance claim
There are multiple reasons why someone hasn’t claimed the marriage allowance when eligible however HMRC let’s you backdate your claim for up to the last four tax years.
The amounts for each tax year are worth up to:
- Tax year 2024/25 – £252.
- Tax year 2023/24 – £252.
- Tax year 2022/23 – £252.
- Tax year 2021/22 – £252.
- Tax year 2020/21 – £250.
Marriage Tax Allowance P800 refund
The tax office will send you a P800 tax calculation letter when a claim for marriage allowance has been made for a previous tax year.
A P800 will show you the amount of marriage allowance awarded, any refund of tax due along with information on how you can request any repayment of tax (either online or wait to receive a cheque through the post).
How to claim the marriage tax allowance from HMRC
You must register for the Marriage Tax Allowance with HMRC.
You can click here to be taken to HMRC’s marriage tax allowance claim page.
Or you can call HMRC directly on 0300 200 3300.
You will then be invited to make an official claim. On average it can take up to 14 weeks to receive your invite and you will need to provide financial details and proof of identity as part of the process.
Married Tax Allowance Tax Code
The partner who receives the marriage allowance will be given a new tax code which tells your employer or pension provider to deduct less tax because of the marriage tax allowance.
HMRC will send your employer or pension provider your new tax code after a successful marriage tax allowance claim.
Marriage tax allowance tax code if you are receiving the allowance:
The partner who is set to receive the marriage tax allowance will be assigned an “M” tax code.
An example would be tax code 1383M which assumes you are receieving the marriage allowance and have a personal allowance of £12,570.
Marriage tax allowance tax code if you are transferring the allowance:
The partner transferring the marriage allowance will be given a new tax code with the letter “N” at the end for example 1034N.
Married Allowance and self assessment
Individuals who complete a self assessment tax return and are transferring their personal allowance by claiming the marriage allowance should fill in the marriage allowance section of their tax return.
If you are the partner who is receiving the marriage allowance you should keep the marriage allowance portion of your return blank.
In the case where both of you submit a self assessment tax return, it is essential that the one passing transferring the marriage allowance submits their tax return a minimum of 3 days prior to the receiver of the allowance.
If your tax code ends with the letter ‘N’ or ‘M’, you don’t need to fill in the marriage allowance section of your tax return.
The tax code tells HMRC that your allowance will be annually forwarded to your partner unless you cancel the the Marriage Allowance.
How to cancel marriage tax allowance
HMRC needs you to tell them if you should no longer receive the marriage allowance. If you don’t it is likely that HMRC will find out at a later date and you will need to repay HMRC what you should not have received.
It is sometimes easy to forget tell HMRC a change in your personal circumstances especially in cases where the marriage allowance has been transferred by someone who earns less than the personal allowance but now has increased earnings over the allowed limit.
You can contact HMRC here to cancel your marriage allowance when you are ready.
