How Can I Use The Marriage Tax Allowance?

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July 31st 2021
Tax Week 17
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How Can I Use The Marriage Tax Allowance?

Share your personal allowance with your partner and save tax you pay - but there are some things to lookout for!

Marriage allowance lets you transfer up to 10 percent of your personal tax-free allowance to a partner. This can be quite a money saver. In the 2019/2020 tax year this means up to £1,250 can be transferred across! The savings can be fairly large. Try adjusting the personal allowance on our tax calculator and you can see the effect on your overall deductions.

The rules are that your partner is a basic rate taxpayer and you, either do not pay tax, or earn below the tax-free limit and therefore have allowance to spare.

For Scottish taxpayers the tax rates are different so the general basic rate rule extends to starter, basic and intermediate rate bands there.

So, if the full £12,500 allowance was available and 10 percent was transferred, this means £1,250 is added to the tax-free allowance of the eligible partner. £1,250 at basic rate tax is worth £250, or around £21 a month.

If someone offered to pay your £20 monthly phone line rental for you, you would take advantage of that offer - but it is surprising the amount of people who can claim the marriage tax allowance, yet do not. We developed a tax refund check to automatically point this out to our users.

The caveats are that the you and your partner must be married or in a civil partnership and you cannot claim married couple's allowance at the same time.

You make a claim by using HMRC online services for marriage allowance and either, get your tax code changed. If the tax code is suffixed M or N, this means that the marriage allowance has been applied.

You can also apply for the allowance on your self assessment tax return.

Changing the tax code is a lengthy process - more than 60 days, but you may be able to get the adjustment backdated.

The process is reversible but still applies until the end of the tax year in which the cancellation is made.

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