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Marriage Allowance: How does it work and what will I save

15th March 2015

Marriage Allowance is a scheme that helps married couples in reducing their annual tax bill by up to £212.

From 20 February 2015 married couples paying tax at the basic rate are entitled to apply for Marriage Allowance.

Marriage allowance

How does Marriage Allowance work?

If one of the partners has income less than £10,600 (the tax-free personal allowance for tax year ending 5 April 2016), that partner has to register for this scheme on HMRC.

The maximum amount you can transfer from your personal allowance to your spouse/wife is £1,060. This means that if your annual income is £9,540 or below, the most you can transfer is £1,060 (i.e. 10% of personal allowance).

If your income in a year is above £9,540, the maximum you can transfer is the difference between £10.600 and your current income. That will be taxed at 20%, therefore the maximum you can reduce from your annual tax is £212.

Before you claim Marriage Allowance make sure that all the following apply:

  • Both partners are born on or after 6 April 1935
  • You are married or in a civil partnership
  • Neither partner has an annual income greater than £42,385 (The basic rate tax band)
  • One partner has an annual income of less than £10,600 (including pensions, savings and investments)

If you would like any further information about whether you are eligible for Marriage Allowance, do give us a ring.