Making The Most Of Your Marriage Allowance
14th April 2021
According to the numbers, there are a lot of people in the UK who aren't getting the most from their marriages. A wrinkle in tax rules means that, if they're eligible, married couples can save up to £250 in tax year. If you missed the boat on this last year, you can even backdate it so you don't lose out! Right now, barely a quarter of eligible couples in the UK are taking advantage of the scheme, and it's costing them real money. Let's take a look at what the Marriage Allowance is all about.
What is Marriage Allowance?
The scheme is pretty simple. If you're making less than the 2021/22 tax-free Personal Allowance of £12,570, you can transfer up to a £1,260 chunk of your own Personal Allowance to your partner. That counts for civil partnerships as well as marriages.
How much money will I get?
As long as your partner isn’t earning more than the Basic Rate tax threshold of £50,270, you can qualify. All told, that’s £1,260 more of their earnings that won’t get taxed, meaning as much as £250 more in your combined pockets each year. The tax thresholds and Personal Allowance obviously change over time, but you can still claim back your tax for up to the last 4-years. The idea is to make sure people get the full benefit of their Personal Allowance, even if they can’t use all of it themselves.
Who can apply for the Marriage Allowance?
Pensioners, people living abroad, as long as they've got a Personal Allowance to transfer.
Remember that you don't even need to have an income to have a Personal Allowance - so don't think you'll be left out because you aren't earning. Your partner will get a new tax code, while yours will sprout an N at the end of it. Those changes are nothing to worry about and we have everything you need to know on our tax codes explained pages.
Why over 85s can't apply
To qualify for Marriage Allowance you must have been born after 5th April 1935. If one or both of you were born before this date, another type of allowance you could be eligible to claim is Married Couple's Allowance. It's worth noting that you cannot claim both Married Couple's Allowance and Marriage Allowance at the same time.
What Happens If My Circumstances Change?
Once you've set your Marriage Allowance up, you don't need to apply again unless your situation changes. Obviously, getting divorced means you no longer qualify for Marriage Allowance, for example. The death of either partner will do the same, naturally enough. You can even cancel it yourself if you need to for any reason.
Since there are income thresholds involved, a change in either your earnings or your partner’s can also affect your Marriage Allowance. For example, if you suddenly start making more than your Personal Allowance, you won’t have any extra to transfer to your spouse or partner. In the same way, if you find yourself bumped into a higher tax bracket, you no longer qualify to receive Marriage Allowance at all. When something changes in your circumstances and you’re not sure if you still qualify for or benefit from the scheme, talk to RIFT to keep yourself on the right track.
How Do You Apply For Marriage Allowance?
It’s actually very easy to claim Marriage Tax Allowance. You can get it all done online at the government website, as long as you’ve got both of your National Insurance numbers handy. Some proof of your identities will also be needed, as usual when you’re dealing with HMRC.
In fact, claiming Marriage Allowance is so simple that you really shouldn’t be paying anyone to do it for you. Don’t get us wrong – there are lots of times when some professional advice can protect you and your money. At RIFT, we go toe-to-toe with the taxman every day, claiming refunds, handling tax returns and much more. However, not every job needs a tax expert to take care of it, and some so-called “experts” are just stringing you along for a little cash.
Claiming Marriage Allowance doesn’t take any heavy-duty number crunching, and you can get the whole thing done with a quick phone call or a trip to the HMRC website. Basically, steer clear of anyone trying to pry money out of your wallet for claiming it on your behalf. They’re counting on you not knowing how easy it is to do – and they’re probably also hoping that you don’t know you only have to claim it once. After you’ve set it up, your Marriage Allowance is automatically applied each year until your circumstances change and/or you cancel it.
Marriage Allowance is a great way to lighten your financial load a little each year, so don’t waste it by paying someone to tick a couple of boxes for you. When it comes to the heavy lifting of Self Assessment and tax rebates, though – that’s where the real experts get to work. Specialist help from RIFT means more money in your pocket and no hassles from HMRC. Get in touch with all your tax questions, problems and concerns, and let us show you why you’re always better off with RIFT Tax Refunds.