Around two million married couples are missing out on Marriage Allowance tax relief worth up to £252 per year – and you can backdate claims for up to four years to get £1,260 back
The tax-free Personal Allowance has remained frozen for years and will stay fixed at its paltry £12,570 threshold for at least another five years after the Government extended the freeze once again, including this Monday.
It’s been locked at its current rate since 2021 and won’t budge until 2031. This means, due to ‘fiscal drag’, increasing numbers of workers will find themselves handing over more tax on their income, as salaries rise with inflation, dragging more earners into the tax net and resulting in heftier bills for everyone.
The Personal Allowance is the sum you can earn before tax kicks in, and it sits at £12,570, where it’s expected to remain until 2031 at the very earliest.
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That means everything earned beyond that figure is taxed at 20%, while higher rate taxpayers face 40% on income above £50,270, and additional rate taxpayers are hit with 45% on earnings exceeding £125,000.
However, there’s one method to boost your tax-free Personal Allowance – though you must be married or in a civil partnership.
Married couples or those in civil partnerships can increase their tax-free earnings by £252 annually and can even backdate their claim for an additional four years. By backdating the claim across up to four separate tax years, you could be in line for a rebate of as much as £1,260.
HMRC will adjust your tax code accordingly, and when combined with the standard Personal Allowance (£12,570), this brings your tax-free allowance up to £13,830 rather than £12,570 — putting £1,260 back in your pocket across four years at £252 per year, reports the Express.
To qualify, one partner must pay no income tax — meaning they earn under £12,570. This could apply if one half of a couple has stopped working, been made redundant, or stepped back from their career to look after children.
The other partner must be a basic rate taxpayer, bringing home between £12,570 and £50,270 once pension contributions are deducted.
Known as the Marriage Allowance, this scheme allows the lower-earning partner to transfer £1,260 of their Personal Allowance to their other half, cutting their tax bill by £252 for every year claimed — equivalent to 20% of £1,260.
AJ Bell director of personal finance, Laura Suter, shed light on how the process works. She said: “More people are being dragged into paying higher levels of tax, largely due to frozen allowances and thresholds that haven’t kept up with inflation. But at the same time, many households are overlooking completely legitimate ways to earn tax-free income, simply because they don’t realise what’s available.”
“A little bit of knowledge about how the tax system works can go a long way. The marriage allowance is a great way to claim some money back if one half of the couple earns less than £50,270 a year and the other either earns less than £12,570 or doesn’t earn any money at all.
“The government lets those who are married or in a civil partnership share their tax-free earnings allowance each year. It means that if one of you hasn’t used up your personal allowance of £12,570 a year you can hand it over to your partner. That could save you up to £252 in the current tax year. It’s thought around two million couples are eligible for this tax break but not claiming it, and even those where one half of the couple is retired can claim the tax break.”
The expert said you can backdate any claims for up to four years, assuming you were eligible in those years and this can be done online. All you need are both national insurance numbers and ID.
To check if you are eligible you can simply use the online calculator through the Government website, but Ms Suter urged people to be aware of imposters and scam websites that are “mocked up”.
For 2024-25, a minor adjustment was introduced, permitting individuals earning between £11,130 and £12,570 to transfer their Personal Allowance, though income within this bracket remains taxable. It still results in savings, albeit smaller than for those earning under £11,130.
Claims can only be backdated for the current year and the preceding four financial years, meaning 2020-21 is now beyond the eligible window. However, you are still able to claim for the current year and the four previous years dating back to 2021-22.
