The Marriage Allowance lets an eligible person transfer £1,250 of their Personal Allowance to their husband, wife or civil partner. Currently, this move can reduce the spouse or civil partner who received the transfer’s tax by up to £250 in the tax year.
- IHT: Expert calls for extension of ‘blue light’ exemption rules
And, while not all couples may save money via the Personal Allowance, some may be able to.
Gov.uk states that to benefit as a couple, the lower earner must normally have income below their Personal Allowance – which is usually £12,500.
It may mean that the eligible person for the Marriage Allowance ends up paying more tax themselves.
However, this could still mean that money is saved as a couple.
The government website hosts a Marriage Allowance calculator, and this can be used by couples to calculate whether and how much tax they could save as a couple.
In order to use it, they would need to input the country in which they live, as well as both members of the couple’s pre-tax income.
It’s possible for those eligible to apply for Marraige Allowance online.
Those successful will see changes to their Personal Allowances be backdated to the start of the tax year (April 6).
It may also be possible to backdate a claim.
This can be done to include any tax year since April 5, 2016, that the person was eligible for Marraige Allowance.
Then, the partner’s tax bill would be reduced, depending on the Personal Allowance rate for the years that are backdated.
The amounts for each year are:
- 2016/17 – £220
- 2017/18 – £230
- 2018/19 – £238
- 2019/20 – £250
- 2020/21 – £250
- Universal Credit UK: Can you get over £1,000 in bonus tax-free money?
Those who claim now could get up to a £250 tax break.
And, people who backdate the maximum of four years could also get up to £938.
It’s understood that this money for previous tax years can be made as a cheque.
It means that people claiming now and who backdate for the current maximum limit, they could get a tax break of up to £1,188.
With many seeing their income affected recently due to the coronavirus crisis, Sean McCann, chartered financial planner at NFU Mutual has suggested looking into whether one can claim the Marriage Allowance.
“Many people have lost parts of their income, and millions are expected to be furloughed,” he said last month.
“If you previously earned over £50,000 but now earn less than that, it’s worth checking if you’re eligible for Marriage Allowance.
“The Marriage Allowance entitles non-taxpayers to transfer up to 10 percent of their £12,500 personal allowance to a basic rate tax paying spouse or civil partner.
“Those who earn between £12,500 and £50,000 and have a partner that either doesn’t work or earns under £12,500 are likely to qualify. Transferring £1,250 to your tax paying partner this year reduces their tax by £250.”
Source: Read Full Article