Following the recent Budget announcement, married couples across the UK have a valuable opportunity to soften the impact of impending tax rises by claiming a significant financial benefit.
What is the Marriage Tax Allowance?
The government's Marriage Tax Allowance scheme permits eligible couples to transfer a portion of their personal tax-free allowance to their spouse or civil partner. This financial manoeuvre can directly reduce the amount of tax the household pays.
Specifically, you can transfer £1,260 of your personal allowance. For the current tax year, this transfer could save the higher earner in the relationship £252 on their annual tax bill.
Who is eligible to claim?
To qualify for this tax relief, you must meet specific criteria. You need to be married or in a civil partnership, and both partners must have been born on or after 6 April 1935.
The key requirement involves your income levels. One of you must be a non-taxpayer, typically earning less than the personal allowance of £12,570. The other partner must be a basic-rate taxpayer, earning between £12,571 and £50,270 and therefore paying income tax at the 20% rate. It is important to note that higher or additional-rate taxpayers are not eligible for this scheme.
The application must be initiated by the non-taxpayer. Once approved, the benefit is applied automatically in subsequent tax years.
How to maximise your claim
A crucial aspect of this allowance is the ability to backdate claims. You can apply for the Marriage Tax Allowance for the last four tax years. If you claim for the current year and successfully backdate for the maximum period, you could receive a total payment of up to £1,258.
For the current tax year, the benefit is delivered through an adjustment to the higher earner's tax code, reducing their monthly tax payments. Any tax owed from previous years is typically repaid via a cheque from HMRC.
This financial boost comes at a critical time. Chancellor Rachel Reeves has confirmed an extension to the freeze on income tax thresholds. The personal allowance will remain at £12,570 until the end of the 2030/31 financial year, a three-year extension beyond the original 2028 deadline.
This policy of fiscal drag means that as wages increase over time, more people will be pulled into higher tax brackets. The Office for Budget Responsibility estimates this freeze will result in an additional 1.7 million people paying income tax at higher rates by 2029/30.
For qualifying couples, proactively claiming the Marriage Tax Allowance presents a straightforward way to secure much-needed financial relief amidst these broader tax changes.
