Marriage Tax Allowance is a tax perk for – you guessed it – married couples. It lets one low earner in the marriage transfer £1,250 of their personal allowance to their partner. It is only for basic rate taxpayers with partners who earn less than the personal allowance.
How does it work?
Marriage Tax Allowance does not get paid to you, but it is a tax relief which essentially means you or your partner will be taxed on a smaller proportion of their salary, so the extra money will be received whenever they get paid each week or each month.
The higher-earning spouse, who must be a basic-rate taxpayer, will then receive a tax credit equivalent to the amount of personal allowance that has been transferred to them.
This is deducted from the amount of tax they would usually have to pay. To be eligible: The low earning partner’s pay before tax must be less than the personal allowance – which in 2020-21 is £12,500.
This is unchanged from 2019-20. The higher-earning partner’s salary must fall between £12,500 and £50,000, otherwise, they are considered a higher rate taxpayer.
To benefit from the Marriage Tax Allowance, the lower earner must apply to HMRC to request any unused personal allowance to be transferred to their spouse.
Those earning less than the personal allowance can transfer a maximum of £1,250 in 2020-21 to their partner’s allowance (the same as in 2019-20).
You can claim up to four years back – meaning you could get over £1000 back from the Government.
If your partner was the lower earner in the couple, the person responsible for managing their tax affairs will need to be the one to call HMRC.
It is now too late to claim back to 2016 if you have not already been claiming, but you can claim back to 2017.