
Personal taxes: How can I cut my tax bill?
• 5 years agoTax is one of the biggest expenses we all have to pay every year whether… Read more »
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If one of you earns less than £10,600 per year, you could keep more of the money your earn. In fact, it can be worth up to £212 per annum, which isn’t to be sniffed at.
The marriage allowance came into force in April 2015, therefore you’d be forgiven for not being aware of its existence. Put simply, by combining your tax free allowance with your partner’s income, you can retain more of the money you earn.
If you cast your mind back to 2010, you may remember prime minister David Cameron claiming that he was going to “end the couple penalty for all couples” and “bolster marriage”. Although we’ve had to wait six years for any action on those words, the marriage allowance is the tax relief Cameron was referring to. For many, it’ll be a welcome boost, although some experts are questioning whether or not it is worthwhile.
If a spouse or civil partner has an unused amount of personal allowance, they can transfer up to 10% of their allowance to their other half. That equates to a maximum of £1,060 under current UK taxation. However, it doesn’t matter what they have left – be it £3,000 or £5,000 – because they can only ever transfer £1,060, hence the controversy.
You can still claim, but it gets rather complicated. This relates to the fact that you have to transfer £1,060 to take advantage of the marriage allowance; it can’t be any more or any less. Therefore, if you have less than that amount available, you’ll likely end up exceeding your personal allowance and subsequently pay tax on the amount you’ve gone over. You’ll still both be better off, but it won’t be by much.
The first thing to do is apply. Happily, the government have set up a specific website for that very purpose: gov.uk/marriageallowance.
The process is quick; you’ll find out almost immediately via email if you are eligible. It doesn’t matter when you apply either as you’ll get the full financial benefit for the whole year. This is providing that you apply before 5th April.
It’s worth noting you can also apply by phone, by ringing 0300 200 3300.
Good news – not much at all. You simply need you and your partner’s national insurance numbers and proof of identity for the partner who will be transferring the allowance.
£212 per year may not sound like much, but every penny counts. Given the relatively simple application process, we think it makes sense to apply if you are married, in a civil partnership and your earnings stack up to the requirements above.