What is the Marriage Allowance?
The Marriage Allowance has been available from 6th April 2015. If your income is £10,600 or less, you may be able to reduce your husband, wife or civil partner’s tax by £212. You may still be eligible if your income is more because of tax-free savings interest.
Marriage Allowance lets you transfer £1,060 of your Personal Allowance to your partner. This is £10,600 for the 2015 to 2016 tax year.
You can claim Marriage Allowance if all the following apply:
- you’re married or in a civil partnership
- your annual income is £10,600 or less, plus up to £5,000 of tax-free savings interest
- your partner’s annual income is between £10,601 and £42,385
- you were born on or after 6 April 1935
This transfer will:
- increase their Personal Allowance, reducing the amount of Income Tax they pay
- reduce your own Personal Allowance
If you or your partner were born before 6 April 1935, you may be able to claim Married Couple’s Allowance instead.
You earn £9,000 and your partner earns £25,000 before tax.
You transfer £1,060 (2014/15) to your partner through Marriage Allowance.
Your partner now has a Personal Allowance of £11,660 (£10,600 plus £1,060). Your Personal allowance is now £9,540 (£10,600 minus £1,060).
You’ll transfer part of your Personal Allowance to your partner every year until one of you cancels Marriage Allowance or your circumstances change, eg because of divorce or death.
How your partner gets their extra Personal Allowance
Once you’ve applied, HMRC will give your partner their allowance automatically either:
- by changing their tax code, usually to 1166M – this can take up to 2 months
- when they send their Self-Assessment tax return, if they’re self-employed
HMRC will also change your tax code if you’re an employee or getting a pension. Your new code will reflect your new Personal Allowance and will end with ‘N’.
Tax if your income is above £9,540 but below £10,600
Your Personal Allowance is reduced if you transfer some of it to your partner, and you’ll have to pay tax on any annual income above £9,540.
You earn £10,000 and your partner earns £25,000.
You transfer £1,060 of your Personal Allowance to your partner. Your reduced Personal Allowance is £9,540.
You need to pay basic rate tax on £460 (£10,000 minus £9,540), giving you a tax bill of £92.
Your partner pays £212 less in tax because of the increase in their Personal Allowance. The net saving to you both would be £120.
How to apply
If you and your partner are eligible for Marriage Allowance, you can register your interest online.
HM Revenue and Customs (HMRC) will send you an email explaining what to do next.
If your application is successful, HMRC will backdate any changes in your tax to 6 April 2015.
If your circumstances change
You or your partner can contact HM Revenue and Customs (HMRC) to cancel Marriage Allowance. Who does this affects the date the allowance ends:
- If you contact HMRC to stop transferring the allowance to your partner, it will end on 6 April 2016.
- If your partner contacts HMRC to stop receiving your allowance, HMRC will backdate the change to 6 April 2015.
If you get divorced or dissolve your civil partnership
You or your partner must contact HMRC – tell them if you want to cancel the allowance.
If you do, the change will be applied from the start of the tax year (6 April) you got divorced in. If you don’t, the allowance will end automatically at the end of the tax year (5 April).