WHAT IS THE MARRIAGE TAX ALLOWANCE AND CAN I CLAIM IT?
A tax break this often overlooked (estimates put the number of missed claims at more than 2 million) is the marriage tax allowance. This tax allowance was introduced from 6 April 2015 and is for couples who are married or in a civil partnership and where one of the couple does not pay tax (has income below the personal tax free allowance which in 2019/20 is £12,500) and your wife/husband/civil partner is a basic rate (20%) tax payer only (ie cannot be a higher rate earner paying 40% tax or above). If those criteria are met then the non-taxpayer can make a claim online to transfer 10% of their tax-free allowance (£1,250 in 2019/20) to their wife/husband/civil partner and that individual could enjoy up to £250 of tax saving in 2019/20 by having their tax free allowance increased by that £1,250 transfer.
MAKING A CLAIM FOR PREVIOUS TAX YEARS
You can make a claim for not only a transfer of part of your personal tax free allowance in the current tax year but also backdate a claim to cover the previous four tax years if all of the criteria above are met in those previous tax years. As this allowance was introduced from 6 April 2015 then to make the maximum possible claim, ie from the very start of this tax break, you have until 11.59pm on 5 April 2020 to make your online claim. Based on the tax free allowance levels of £10,600 in 2015/16, £11,000 in 2016/17, £11,500 in 2017/18 , £11,850 in 2018/19 and the current year’s £12,500 then a transfer of 10% of this allowance to your 20% tax paying spouse/civil partner for those five tax years could result in a tax reclaim of £1,150.
HOW THE CLAIM IS CALCULATED
The allowance that is transferred is 10% of the tax-free allowance in that particular tax year. Not only cannot it not be more than this 10% figure but it can also not be less. So in some circumstances, the non-tax payer may actually pay some tax when the full marriage allowance is transferred but the couple will still be saving tax in such circumstances.
MAKING THE CLAIM
It's the non-taxpayer who must apply to transfer their allowance and the process of making the claim is very easy online at HMRC. You will need National Insurance Numbers for both of you and one of the following acceptable forms of ID for the person making the claim (ie the non-taxpayer):
- the last 4 digits of the account that your child benefit, tax credits or pension is paid into
- the last 4 digits of an account that pays you interest
- details from your P60
- details from any of your 3 most recent payslips
- your passport number and expiry date
You’ll get an email confirming your application.