Martin Lewis: Money saving expert tells couples in a marriage can claim this tax allowance | Personal Finance

Martin Lewis made an appearance on This Morning today to highlight an overlooked tax break that could save people thousands. Marriage Allowance allows a person within a couple to transfer £1,250 of their personal allowance (the amount of money someone can make before they are taxed) to their husband, wife or civil partner. As Mr Lewis explained: “The marriage tax allowance launched five years ago, and it’s for those who are married or in a civil partnership and one is a non-tax payer and the other a basic-rate 20 percent taxpayer.

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“The non-taxpayer can apply to have 10 percent (£1,250 for this tax year) of their tax-free allowance shifted to the taxpayer. This means £1,250 of income they were taxed on at 20 percent is now tax-free – a £250/year gain done via altering your tax code.

“And assuming you were eligible, you can back claim to when it started too – so the 2015/2016 tax year – which means you could get £1,150 back. Over two million are missing out, so it’s worth checking out on the Gov website and it’s the non-tax payer who should claim.”

As he detailed, this proved to be very beneficial for people: “I did this as one of New Year resolutions at the beginning of January, but I’ve been swamped with successes, and so I wanted to give you a quick reminder for those who may have missed it. 

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Martin Lewis

Martin Lewis was on “This Morning” to discuss marriage tax allowances (Image: GETTY & ITV)

Married couples

Married couples or those in civil partnerships can benefit from a tax break (Image: GETTY)How it works

To qualify for this, the government details that lower earner of the couple must normally have an income below the personal allowance level, which is usually £12,500.

While transferring part of your personal allowance to a partner could result in an individual tax bill, the couple as a whole would still end up paying less.

So, for example, if the lower earning person within the couple receives £11,500 a year in income they will not pay tax as it’s underneath the £12,500 threshold.

Their partners income is £20,000, meaning that £7,500 is paid in tax (this is their “taxable income”, £20,000 minus £12,500). So together, the couple will be paying total income tax of £7,500.

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Marriage Allowance can be claimed, which means that the lower earner will transfer £1,250 of their allowance to their partner.

The lower earner will now have a personal allowance of £11,250 and the higher earning partner will receive a “tax credit” on £1,250 of their income.

Once this is done, the lower earner will now pay tax on £250, but the higher earner will only pay tax on £6,250 of their income.

The couple as a whole will benefit, as totally income tax will be paid on £6,500 rather than £7,500.

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There are certain rules for who can claim this tax break. It is only applicable for couples where one is a non-taxpayer and the other is a basic rate taxpayer, meaning they earn between £12,501 and £50,000 a year.

Couples who live together but are not married or in a civil partnership will not be able to claim Marriage Allowance.

However, an application for this allowance will not be affected if either of the partners are receiving a pension or living abroad, so long as they get a personal allowance.


Wages dependant

Eligibility for the tax break will be dependant on earnings (Image: GETTY)

To start the application, people will need to head online. If both people within the couple receive their income solely from wages, then the person who earns the least should make the claim. So long as the application is successful, the changes will be backdated to the start of the tax year. HMRC will give the allowance to the partner receiving it in one of two ways.

It will either be done when they send in their self assessment tax return, or by having their tax code changed, which can take up to two months. Both partners will receive new tax codes that reflect the transferred allowance. The tax codes will end with “M” for the person receiving the allowance, or “N” for the person transferring the allowance.

Married tax allowance will automatically apply for the partnership every year once it has been completed. However, it is the couple’s responsibility to cancel the policy should circumstances change. Circumstances that will need to be reported include the death of a partner, divorce or dissolution for civil partnerships or changes to income.