Married couples and those in civil partnerships can increase their tax-free Personal Allowance and potentially receive a cheque for up to £1,000 from HMRC by backdating claims for the Marriage Tax Allowance. The Personal Allowance, the amount you can earn before paying income tax, has been frozen at £12,570 since 2021 and will remain at that level until 2031 after Chancellor Rachel Reeves extended the freeze. This policy, known as fiscal drag, pushes more people into higher tax brackets as wages rise with inflation.
How the Marriage Tax Allowance Works
Speaking on The Martin Lewis Money Show Live on ITVX in March, Martin Lewis explained that the allowance allows a non-taxpaying spouse (earning under £12,570) to transfer 10% of their unused Personal Allowance to their partner, who must be a basic rate 20% taxpayer. The lower earner’s tax-free threshold drops to £11,310, while the higher earner’s increases by £1,260, resulting in a tax saving of £252 per year.
Lewis stated: “So here’s how it works, it has to be a non-taxpayer, so that’s someone earning under the £12,570 a year Personal Allowance, the amount that you can earn each year tax-free, married to a basic rate 20% taxpayer. The non-taxpayer can go to gov.uk and apply to give 10% of their Personal Allowance to the taxpayer.”
Backdating Claims for a £1,000 Cheque
The key benefit is the ability to backdate claims for the previous four tax years, in addition to the current year. This means eligible couples can claim up to five years’ worth of the allowance, resulting in a total benefit of approximately £1,000. HMRC issues the backdated amount as a cheque or bank transfer (BACS).
Lewis added: “The times five, is crucial. Because with the Marriage Tax Allowance you can back claim four tax years, so you can get this tax year, which is done by altering your tax code, and you can go back four prior tax years, which is about £1,000 benefit, which you get as a cheque, or through BACS, assuming of course that you were eligible for it.”
Eligibility and How to Apply
To qualify, one partner must earn below the Personal Allowance threshold of £12,570, and the other must be a basic rate taxpayer (earning between £12,571 and £50,270 in England, Wales, or Northern Ireland). Couples can apply online at gov.uk to transfer the allowance for the current tax year and backdate for previous years. The process adjusts the tax code for the current year and triggers a payment for past years.
This allowance is a legal way to reduce tax bills amid frozen thresholds, helping households keep more of their income.
