I was asked this week
“Can I save money by claiming the marriage tax allowance?”
The answer to most questions like this starts with it depends!
The government introduced the new marriage tax allowance in April 2015. It will apply to couples under the following circumstances:
•You’re married or in a civil partnership (just living together doesn’t count).
•Both of you were born on or after 6 April 1935.
•One of you needs to be a non-taxpayer, which usually just means earning less than the £11,000 personal allowance (£10,600 for 2015/16).
•The other one of you needs to be a basic 20% rate taxpayer, this means you’d normally need to earn less than £43,000 (£42,385 for 2015/16)
This can save you up to £212 from April 2015 and up to £220 from April 2016.
From April 2016, anything you earn between £11,001 and £43,000 a year will be taxed at 20%. If your spouse or partner earns £7,500 a year, they effectively have £3,500 of their allowance that they are not using. Of this, they can transfer the full £1,100 (maximum of 10% of the basic personal allowance). This increases your tax-free allowance to £12,100, and the 20% saving on that extra bit is equal to £220.
If your partner’s earnings are much closer to £11,000, they can still share the leftover bit of their allowance. Say they earn £10,500; they can give you the remaining £500. In this case you will save £100 a year.
If you didn’t claim for 2015/16 then it’s not too late; if you were eligible for Marriage Allowance in the 2015 to 2016 tax year, you can backdate your claim to 6 April 2015. You could reduce your tax bill by up to £432.
You can apply for Marriage Allowance online.