Tax Saving with Marriage Allowance is a simple but often overlooked way to save, and many couples in the UK are eligible without even realising it. With the potential to save up to £252 in the current tax year and claim refunds for up to four previous tax years, it’s worth checking if you qualify.
What Is Marriage Allowance?
Marriage Allowance allows one spouse or civil partner to transfer a portion of their personal allowance (the amount of income they can earn tax-free) to the other. Currently, you can transfer up to £1,260 of your personal allowance to your partner. This reduces the higher earner’s tax liability by up to £252 in the tax year 2024/2025.
This transfer is most beneficial when:
- The transferring spouse earns less than the personal allowance threshold (£12,570 for the 2024/2025 tax year) and ideally below £11,310.
- The receiving spouse earns less than £50,270 (basic rate taxpayer threshold for 2024/2025).
However, if the receiving partner earns less than the personal allowance themselves, there’s no benefit to claiming Marriage Allowance.
How to Claim Marriage Allowance
There are two ways to claim Marriage Allowance, depending on whether you’re already a personal tax client or handling it independently.
For Personal Tax Clients
If you’re a client of our personal tax service, we can handle the claim for you as part of compiling your tax return. However, HMRC requires both partners to authorise the transfer. This is done through an online claim on the government’s Marriage Allowance application page.
DIY Claiming Process
If you’re not a client, you can easily claim Marriage Allowance by:
- Calling the Income Tax Helpline on 0300 200 3300.
- Having the following details ready:
- Your National Insurance number.
- Your partner’s National Insurance number.
- Proof of identity, such as details from your P60, recent payslips, or passport.
Can Marriage Allowance Be Backdated?
Yes, you can backdate claims for up to four tax years if you met the eligibility criteria during those years. This means you could potentially claim a refund of up to £1,260 for previous years (2020/2021 to 2023/2024) in addition to the current year’s savings.
Example:
- Current year savings: £252
- Backdated savings for four years: £1,008
Total savings: £1,260
Recent Updates for 2024/2025
- Allowance Increase: The personal allowance threshold for the 2024/2025 tax year remains at £12,570, and the Marriage Allowance transferable amount has increased slightly to £1,260, offering up to £252 in savings.
- Income Limits: The upper income limit for basic rate taxpayers is £50,270, ensuring Marriage Allowance remains applicable to many households.
- Online Claims: The HMRC portal remains the fastest and most efficient way to make a claim.
Why Business Owners Should Check Their Eligibility
Marriage Allowance isn’t just for individuals—it can also benefit business owners and self-employed couples. For instance:
- If one spouse operates a small business and has a low taxable income, transferring their unused personal allowance can significantly reduce the tax liability of the other.
- Backdating claims can provide a useful cash flow boost for your household or business.
Common Mistakes to Avoid
- Missing Eligibility Checks: Ensure both partners meet the criteria before making a claim.
- Not Backdating Claims: Don’t miss out on additional savings by failing to backdate.
- Overlooking Changes in Income: If circumstances change (e.g., one partner’s income increases), review your eligibility annually.
- Incorrect Details: Ensure all information provided to HMRC matches their records, including National Insurance numbers and income details.
How to Maximise Marriage Allowance Savings
- Review Annually: Income levels can change, so reassess your eligibility each tax year.
- Plan Ahead: For business owners, strategically managing income between spouses can help maximise tax savings.
- Keep Records: Maintain accurate records of claims, backdated payments, and any correspondence with HMRC.
Key Takeaway: Marriage Allowance is a valuable tool for couples to reduce their tax liability. With the ability to claim up to £1,260 over five tax years, it’s worth taking a few minutes to check your eligibility. Whether you’re a business owner or an employee, making use of this allowance could provide a welcome financial boost.
If you need help with this, or with other tax advice, then please get in touch with our tax accountants today!