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What Is The Marriage Allowance And How Does It Work?

Are you looking to save a bit of extra money? Then a tax-break could be a big help. Take a look at what the marriage allowance is, how it works, and if you qualify.

marriage allowance

Benjamin Franklin once said, “Nothing is certain except death and taxes.” And how right was he? Although I’m still here, so I’m clinging to the hope that he was only half correct.

Generally, the more you work, the more tax you pay. Although if you’re rich enough, it does appear there are ways around paying tax…

Anyway, for those of us who earn under £100,000, we receive a tax-free Personal Allowance of £12,500 annually. That means the majority of us don’t pay any Income Tax on the first £12,500 that we earn each year. Once we pass that figure, we pay 20% tax on any earnings above that amount. Then, for those lucky few that earn beyond £45,000, they will have to pay 40%.

But the Personal Allowance isn’t the only way to avoid paying tax. Another way is by using your Marriage Allowance.

If you work from home, take a look at how to claim a tax refund.

What is the Marriage Allowance

In 2015, the Marriage Allowance (also known as the married couple’s allowance) was introduced. This meant that a spouse or civil partner could transfer 10% (For 2020/2021 worth £1250) of their unused Personal Allowance to their spouse.

Finally, a real reason to celebrate marriage!

However, it appears that this tax break is not very well known, as two million couple have yet to claim it.

Who can claim the marriage allowance?

You can get Marriage Allowance if all the following apply:

  • you’re married or in a civil partnership
  • you don’t earn anything or your income is £12,500 or less
  • your partner’s income is between £12,501 and £50,00 (or £43,430 if you’re in Scotland)

It won’t affect your application for Marriage Allowance if you or your partner:

  • are currently receiving a pension
  • live abroad – as long as you get a Personal Allowance.

How much is the marriage allowance worth?

If you qualify for the maximum amount, then it means a reduction on your tax bill of £250 per year. And the good thing is, it can be backdated by up to 4 years. If you’ve never claimed before, you could be in-line for a small lump sum.

You can find out if you’re eligible to claim, and how much you could save, by visiting the government website.

How does the marriage allowance get paid?

As nice as it would be to receive a cash sum each week, it doesn’t quite work like that. Instead, your tax code is adjusted meaning less tax is taken from your pay. That means you should see your take-home pay rise slightly each month.

How to apply for the marriage allowance

Surprisingly, putting in an application isn’t particularly confusing (which is odd for a government form), although you do need to have some information to hand.

Before you get started:

You need you and your partner’s National Insurance numbers.

You also need a way to prove your identity. This can be one of the following:

  • the last 4 digits of the account that your child benefit, tax credits or pension is paid into
  • the last 4 digits of an account that pays you interest
  • details from your P60
  • details from any of your 3 most recent payslips
  • your passport number and expiry date

Once you have all these details, you can apply online by following this link.

Is it worth claiming the marriage allowance?

Of course! Although not all couples will qualify, it is certainly worth checking to see if you can cut your tax bill. It will only take you 15 minutes to apply and could save you hundreds of pounds every year.

Or, if you’re looking for other ways to save, take a look at how you can reduce your tax bill if you wear a uniform for work.

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