Save on Tax as a Couple

What is the Marriage Allowance?

The Marriage Allowance allows one spouse or civil partner to transfer up to - £1,260 of their personal tax-free allowance to their partner.

Eligibility Criteria

To benefit from the Marriage Allowance, certain conditions must be met:

1. Marital Status: The couple must be married or in a civil partnership.

2. Income Requirements: The transferring partner must have an annual income of £12,570 or less, which is within their personal allowance.

3. Tax Rate: The receiving partner’s income must be between £12,571 and £50,270, meaning they are a basic rate taxpayer. In Scotland, the upper limit is £43,662 due to differing tax bands.

How to Apply

Applying for the Marriage Allowance is straightforward and can be done online via the HM Revenue and Customs (HMRC) website. Here are the steps:

1. Online Application: Visit the HMRC Marriage Allowance application page.

2. Details Required: Provide details such as National Insurance numbers and personal information for both partners.

3. Confirmation: Once the application is processed, HMRC will adjust the tax codes of both partners.
   

Benefits and Considerations

The primary benefit of the Marriage Allowance is the potential tax saving, which can be backdated by up to four years, providing a lump sum refund for previous years. For instance, if a couple qualifies for the allowance for the past four years, they could receive up to £1,008.

However, there are a few considerations:

• Income Changes: If the income of either partner changes, affecting their eligibility, they must inform HMRC to avoid overpayments or underpayments of tax.

• Marriage and Civil Partnership Only: Co-habiting couples who are not married or in a civil partnership do not qualify.

Conclusion

The Marriage Allowance is a valuable tax benefit for eligible couples, offering a straightforward way to reduce tax bills and increase disposable income. By understanding the eligibility criteria and application process, couples can ensure they make the most of this financial relief, enhancing their household budget.

For personalized advice and assistance, visit iaccountingservices.co.uk