When you decide to get married, tax planning is probably fairly low on your list of romantic requirements. But making use of the Marriage Allowance can actually reduce your tax bill by £250, and can often be overlooked when thinking about your wealth planning.

Who qualifies for the Marriage Allowance?

The allowance applies to married couples and people in a civil partnership. To be eligible, one person in the couple must earn below the tax threshold, and the other mustn’t pay tax at a rate higher than the basic rate. NOTE: the allowance is NOT available to couples who are not married or in a civil partnership – so couples in a common-law relationship can’t apply.

How does the allowance work?

The lower earner transfers 10% of their personal allowance to their partner. For 2021/22 and 2022/23 that’s a transfer of £1,257 which is rounded up to £1,260. The recipient offsets that against their own tax payable (20% x £1,260 =), saving up to £252. If the lower earner’s taxable income is below £11,310 they still won’t pay tax, so have lost nothing by transferring the allowance.

How do I claim the allowance?

If you submit a self-assessment income tax return, you can make the claim in the return. Alternatively you can write to HMRC, or arrange it over the phone at 0300 200 3300. The easiest way, however, is to apply online at www.gov.uk/apply-marriage-allowance.

What are the main perks?

You can claim the allowance even if you’re drawing a pension, or even living abroad, as long as you claim a personal allowance. You can back-date your claim as far back as the 2018/19 tax year, so potentially there are tax savings up to £1,090 plus a further £252 for the current (2022/23) year and future years.

Are there any potential snags?

The claim is for ‘all or nothing’. So, for example, if you want to use the allowance for the 2021/22 tax year, you must transfer the whole of the £1,260. If you earn more than 90% of the personal allowance (£11,313) and your spouse earns less than 110% of the allowance (£13,827) then your overall tax bill will be higher – which makes the whole claim process redundant.

Talk to us about applying for the Marriage Allowance

Saving around £250 each year is not going to turn you and your partner into millionaires. But, as the old saying goes, ‘every penny counts’ and if the Marriage Allowance is available then it makes sense to make a claim.

As your accountant and tax adviser, we can let you know whether you’re eligible for the allowance and if backdating for previous tax years is also an option.


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