A Charity offering personal help and advice for all serving and former members of the Royal Navy, Royal Marines, their Reserves and Families

Marriage Tax Allowance – Don’t see yourself off through inactivity or ignorance.

Published 28/03/2018 10:54:00, by Marina Maher


During the WEA Financial Awareness lectures to newly joined members of the RN and RM we talk about making sure that individuals take advantage of the tax breaks that the Chancellor of the Exchequer gives them .  Many service personnel feel uncomfortable about applying for tax benefits or believe that the mechanism is too complicated to make it worthwhile – if that is the case and you are married or in a civil partnership  you may be throwing away up to £662 through a tax break called the marriage tax allowance.
The marriage tax allowance is a way for couples to transfer a proportion of their personal allowance (the amount you can earn tax-free each tax year) between them.   Here is a quick guide to what this means.


Who is eligible to apply? 
   
• You must be married or in a civil partnership (just living together is not enough).
• One spouse or partner needs to be a non-taxpayer, i.e  earning less than the £11,500 personal allowance (£11,000 for 2016/17, £10,600 for 2015/16).
• The other needs to be a basic 20% rate taxpayer (higher or additional-rate taxpayers aren't eligible for this allowance). This means you'd normally need to earn less than £45,000 (£43,000 for 2016/17 or if you live in Scotland, £42,385 for 2015/16).
• You both must have been born on or after 6 April 1935.
 


How does it work?
The partner who has an unused amount of personal allowance can transfer £1,150 of their allowance to the other (10% of the full allowance).   It doesn't matter if they have £5,000 of allowance left or £500; they can only transfer £1,150.

For Example LET Michelson earns just over £31,000 per year and as such is a basic-rate taxpayer (higher- rate tax commences at annual earnings of£45,000 for 17/18).  His wife has no income at present because she is looking after their two young children who are pre-school age.  Her full personal allowance is £11,500 so she can transfer the full allowance to her husband.  Thus means that LET Michelson’s personal allowance goes up to £12, 650 when his wife makes the transfer.  This means he now has an extra £1,150 which he would have paid tax on at 20% but now doesn’t!  Which means he is £230 better off! (20% of £1,150)


So where does £662 come into it?
The good news is that HRMC allow you to claim for up to 4 years in arrears if not claimed before, so as long as you were married or in a civil partnership before April 2015 you can backdate your claim!  The marriage tax allowance started on 6 April 2015, and in year one was worth £212. For the following tax year, starting in April 2016, it was worth £220. For this tax year – beginning April 2017 – it's worth £230. Thus the cumulative plus could be £662. 

How to apply
Its simple, takes a few minutes and can be done online by going to the Government Web Page below: 


https://www.gov.uk/marriage-allowance


All you need to have is both partners national insurance numbers but please remember that it must be the non-tax paying partner that makes the application.


If you would like more information or greater explanation of the allowance and how it might effect you there are a number of very helpful websites offering guidance and advice that I have listed below:


https://www.moneysavingexpert.com/family/marriage-tax-allowance
https://www.which.co.uk/money/tax/income-tax/guides/tax-rates-and-allowances/marriage-allowance-explained
https://www.gov.uk/apply-marriage-allowance
https://www.citizensadvice.org.uk/debt-and-money/tax/income-tax-how-much-should-you-pay/income-tax-allowances-and-amounts/#h-marriage-allowance---if-you-re-married-or-in-a-civil-partnership

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