Two million couples missing out on tax break

Is there £662 out there with your name on it?

Two million couples have failed to claim their share of £1.3bn of marriage allowance cash, it has emerged. Yet getting hold of this money – much of which would be sent to you in the form of a cheque – is simple and takes just a few minutes, so every couple should check whether they are eligible.

Figures obtained from HMRC show that the take-up of the marriage allowance is “shockingly low”. It’s perhaps something that passed a lot of people by but in the December 2013 autumn statement the then-chancellor, George Osborne, announced that the government would be introducing a transferable tax allowance for married couples and civil partners.

Called the marriage allowance, this tax break took effect in April 2015 and the government said at the time that more than four million married couples and 15,000 civil partnerships stood to benefit. Ministers said it would help them save up to £212 a year – that figure has since risen to £230. They added that this was about acknowledging that “it is families who raise our children, look after our old and keep our country going”.

I would encourage every married couple to check whether they are eligible, including for the past two years.

The marriage allowance is specifically designed for couples where one partner pays standard rate income tax and the other is a non-taxpayer. You can claim it provided the following apply:

  • You are married or in a civil partnership;
  • One partner in the couple doesn’t earn anything at all or their income is £11,500 or less in 2017-18;
  • And the other partner’s income is between £11,501 and £45,000 in 2017-18 – or £43,000 if you are in Scotland.

If you are eligible, the lower earner can transfer any unused tax-free allowance of up to 10% of the value of the full personal allowance (i.e. £1,150 in 2017-18, because the personal allowance is currently £11,500) to their higher-earning partner. This reduces their tax by up to £230 in the current tax year.

What’s more, you can backdate your claim to include any tax year since 5 April 2015 during which you were eligible for the allowance. A couple who claimed now for 2015-16, 2016-17 and 2017-18 stand to gain to the tune of £662. The good news is that any money for previous tax years is likely to be paid in the form of a cheque.

The government has said applying online is simple and can be done at gov.uk/apply-marriage-allowance. It is the non-taxpayer who has to apply and they will need their own and their partner’s national insurance numbers. They will also need a way to prove their identity (e.g.,the last four digits of the account that their child benefit, tax credits or pension are paid into, or their passport number and expiry date).

HMRC will typically give the recipient partner their extra allowance either by changing their tax code or via the self-assessment tax system. The lower earner’s personal allowance will transfer automatically to their partner every year until one of them cancels the allowance or their circumstances change – for example, because of divorce or death.

Meanwhile, if you or your partner were born before 6 April 1935, you might benefit more as a couple by applying for the married couple’s allowance instead. This could reduce your tax bill by between £326 and £844.50 a year. You can claim this allowance if all the following apply: you are married or in a civil partnership; you are living with your spouse/civil partner; and one of you was born before 6 April 1935.