Claiming the tax-free marriage allowance

marriage allowance

The tax-free marriage allowance has been around since 6 April 2015, allowing up to 10% of unused personal allowance to be transferred between spouses and civil partners resulting in a tax saving at 20%. Currently this works out at £12,570 @10% @20% = £251 tax saving.

The Rules:

  • The transferor must have unused personal allowance i.e. earn below the PA threshold; this is £12,570 in 2021/22
  • The recipient of the unused PA must be a basic rate taxpayer, paying tax @20%
  • The personal giving up their PA must make the claim – this can be done online or you can call 0300 200 3300
  • Both parties must meet the criteria in order to transfer the PA

How much is the marriage allowance worth?

In the tax year 2021/22, up to £1,257 can be transferred across and added to the basic rate taxpayer’s PA, resulting in an extra tax saving of up to £251 (£1,257 @ 20%).

Can I claim marriage allowance for previous periods?

Yes! When claiming retrospectively, you can look back 4 years providing you both satisfy the criteria for each tax year. The personal allowance has changed in most years, resulting in a different potential maximum marriage allowance claim. If claiming before 5 April 2020/21, you can make a claim for the 2016/17 tax year and the years up to 5 April 2021.

How does this differ from the Married Couples Allowance?

The Married Couples Allowance may be available if one of you was born before 6th April 1935. This extra tax relief will provide you with even more in tax savings.

Tax is always changing and we’re here to help you get it right, whilst ensuring you’re optimising your tax position. If you’d like advice on your current position or are thinking about making some changes, we’re well placed to help you. Please get in touch to speak with [email protected] or 01527 558539 and find out how we can help improve your personal tax position.