Money-saving guru Martin Lewis has urged millions of couples to act quickly and see if they could benefit from a lucrative tax break worth £252 a year
Martin Lewis has urged millions of couples to act quickly, and cash in on a tax break worth over £1,200. The money-saving guru recently explained on his eponymously-named show that Brits can backdate their claim to Marriage Tax Allowance by up to four tax years (provided you were eligible).
If you’re married, or in a civil partnership, and are under the age of 89 – you could be eligible for the financial perk. However, with the tax year ending next month (April 5), many couples are at risk of losing their ability to claim for the 2020/21 tax year, which could be worth up to £250.
“If you’re trying to claim this tax year and past tax years, which most people will be doing, I’d just do it by post as it’s just one application,” Martin said. “The key is that HMRC must receive it by April 5, so you’ve got time but I’m saying do it now because it’s a new way of doing it by post and it may get clogged up.”
What is Marriage Allowance?
The Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife, or civil partner. In turn, this could reduce your tax by up to £252 a year. “To benefit as a couple, you (as the lower earner) must normally have an income below your Personal Allowance,” the UK Government explains.
The standard personal allowance is £12,570, while those that earn between £12,570 and £50,270 (or if you live in Scotland it’s £43,662) you’ll be a basic 20 per cent rate taxpayer. However, transferring some of your taxable income over to your partner means you’ll be subject to a less hefty bill. Here’s an example from GOV UK:
“Your income is £11,500 and your Personal Allowance is £12,570, so you do not pay tax. Your partner’s income is £20,000 and their Personal Allowance is £12,570, so they pay tax on £7,430 (their ‘taxable income’). This means as a couple you are paying Income Tax on £7,430. When you claim Marriage Allowance you transfer £1,260 of your Personal Allowance to your partner. Your Personal Allowance becomes £11,310 and your partner gets a ‘tax credit’ on £1,260 of their taxable income. This means you will now pay tax on £190, but your partner will only pay tax on £6,170. As a couple you benefit, as you are only paying Income Tax on £6,360 rather than £7,430, which saves you £214 in tax.”
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There are however some circumstances where it is not worth going for the Marriage Allowance, even if you’re eligible – and this tends to be those who are close to exceeding their Personal Allowance. As Martin Lewis’ MSE states: “Where the non-taxpayer earns between £11,310 and £12,570, there is a chance you and your partner won’t benefit from Marriage Tax Allowance because of the way the tax is calculated. In some cases, you could actually end up out of pocket (even if you’re technically eligible).”
You can use the government’s Marriage Allowance calculator to find out how much tax you could save here. If you receive other income such as dividends, savings or benefits from your job, you can contact the Income Tax helpline for further advice.
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