How the marriage allowance works – it could mean some couples are better off

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The marriage allowance gives some married couples and those in a civil partnership an extra £200+ a year. Not everyone’s eligible for it – find out if you are and how to claim.

How does the marriage tax allowance work?
Married couples and those in a civil partnership will have to register online to get the tax break, although there is a phone line if you’re not able to access the internet. If you didn’t register last year, the tax break will be backdated so you shouldn’t lose any money.

  • The tax break is worth up to £220 in tax year 2016-17. That’s because someone not earning anything at all or earning less than the personal tax allowance could transfer up to £1,100 of their unused allowance to their husband, wife or civil partner. At the basic rate of tax of 20%, a transfer of £1,100 is worth £220 a year.

SAVVY TIP: This figure will change on April 6th every year. The amount of the personal allowance that someone can transfer to their husband or wife is 10% of the personal allowance, which is £11,000 in tax year 2016-17 (hence the figure of £1,100).

  • The tax break isn’t available to higher rate taxpayers. If you have a couple where one partner pays tax at 40% or 45% and the other doesn’t pay tax, the married couples’ tax break wouldn’t give them any benefit.
  • The tax break is available to married couples (whether straight or gay) and civil partners.
  • The tax break is worth up to £4.23 a week in 2016-17 (based on a tax break of £220 a year).
  • The tax break was introduced on April 6th April 2015. The first payment will be made in April 2016. In later years, the tax allowance will be paid through PAYE/the self-assessment system.
  • You will only be able to register for this allowance online You cannot claim this allowance by phone. You have to verify your identity online, but if your identity can’t be verified, there is an option to speak to someone on the phone.

SAVVY TIP: You can apply for the married couples’ tax allowance on the Gov.uk website. Be aware that some people have had problems registering online and verifying their identity. There are no plans to make this tax benefit something that can be claimed offline.

  • The tax break will not be available to anyone who’s divorced. When a couple gets divorced they would need to tell HM Revenue and Customs (HMRC) and the partner who transferred their unused tax allowance would be able to revoke the transfer during the tax year in which they divorce, if they wish.
  • The tax break could be returned if a couple separates. If a couple separates (formally), the partner transferred the unused allowance would be able to ask for their tax allowance back if they contact HMRC.

SAVVY TIP: You can still claim the tax break if you and your husband, wife or civil partner live apart but haven’t formally separated.

  • The tax break would be returned if a spouse or civil partner died. If, for example, a wife were to transfer her unused tax allowance to her husband and he died, she would immediately be given the allowance back.

New married couples’ tax break v married couples’ allowance
Married couples used to get a married couples’ allowance, which was abolished in April 2000 for anyone who hadn’t reached 65 at the time.

SAVVY TIP: The old style married couples’ allowance can still be claimed by couples where either partner was born on or before April 5th 1935.

  • It was more generous than the marriage allowance
  • Married couples who qualify for the married couples’ allowance won’t be able to receive the marriage allowance as well.

Related articles:

Marriage second time around – how to sort out your finances

What does marriage mean to your finances?

Married couples and civil partners can transfer their inheritance tax allowance – don’t miss out

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