HMRC offers a valuable tax benefit known as the Marriage Allowance, which can increase a couple’s tax-free Personal Allowance by £1,260. This simple rule allows one partner to transfer part of their unused Personal Allowance to the other, boosting the couple’s overall tax efficiency and potentially increasing take-home pay by up to £1,260 annually.
The Personal Allowance is the amount of income an individual can earn before they start paying income tax. Under the Marriage Allowance scheme, if one spouse or civil partner earns less than the Personal Allowance threshold — typically £12,570 per year — they can transfer £1,260 of their allowance to their partner. This transfer reduces the partner’s taxable income and can lower their tax bill by up to £252 for the tax year (which runs from 6 April to 5 April the following year).
To qualify, couples must be married or in a civil partnership. The lower-earning partner’s income must be below the Personal Allowance limit, and the higher-earning partner must be a basic rate taxpayer, meaning their income generally ranges between £12,571 and £50,270 before transferring the allowance.
READ MORE: Co-op Expands Member Perks Online, Helping Shoppers Save Over £80 Annually
READ MORE: Buy a farmhouse for £1.6m – complete with a charming model village
It’s important to note that the scheme is not available to unmarried couples living together. Additionally, for couples in Scotland, the higher earner’s income must fall between £12,571 and £43,662, corresponding to the Scottish starter, basic, or intermediate tax rates.
If either partner was born before 6 April 1935, they may benefit more from the Married Couple’s Allowance, which is a separate tax relief and cannot be claimed concurrently with the Marriage Allowance.
Couples unsure about their eligibility or taxable income, especially those with other income such as dividends or savings, should contact the Income Tax helpline for guidance to ensure they maximize their tax benefits.