Marriage Allowance is a valuable tax break for couples in the UK that can help reduce their overall tax bill. It allows one partner to transfer a portion of their unused Personal Allowance to their spouse or civil partner, potentially saving up to £252 a year (2024/25). This guide explains how Marriage Allowance works, who qualifies, how to apply, and how to make the most of this tax-saving opportunity.
What is Marriage Allowance?
Marriage Allowance is a government initiative that lets one spouse or civil partner transfer 10% of their unused Personal Allowance to the other, provided certain conditions are met. For the 2024/25 tax year, the Personal Allowance is £12,570, so the transferable amount is £1,260.
The recipient of the allowance gains a tax reduction of 20% of this amount, which equates to £252 off their tax bill. This relief helps lower the overall tax burden for many couples.
Who Can Claim Marriage Allowance?
To qualify for Marriage Allowance:
- You must be married or in a civil partnership (cohabiting couples do not qualify).
- One partner (the lower earner) must have income below the Personal Allowance (£12,570 for 2024/25).
- The other partner (the higher earner) must be a basic rate taxpayer (earning between £12,571 and £50,270).
- Both partners must have been born on or after 6 April 1935 (otherwise the Married Couple’s Allowance may apply).
When Marriage Allowance is Most Effective
Marriage Allowance is most beneficial when one partner’s income is below the Personal Allowance and the other partner’s income is in the basic rate tax band. Examples include:
- One partner works part-time or not at all, while the other works full-time.
- One partner is a stay-at-home parent or carer, while the other earns a salary.
- One partner has retired early with a pension below the tax threshold, while the other still works.
How to Apply for Marriage Allowance
Applying for Marriage Allowance is straightforward and free:
- Visit the HMRC website at gov.uk/marriage-allowance.
- The lower-earning partner must apply and provide details including National Insurance numbers and identity verification (e.g., P60, payslip, or UK passport).
- Once approved, HMRC will adjust the higher earner’s tax code and backdate any refunds to the start of the tax year.
You can also apply by phone or by writing to HMRC, but online is generally faster and more convenient.
Backdating Marriage Allowance
You can backdate your Marriage Allowance claim by up to four previous tax years if you were eligible during those years. This means you could receive a tax refund of up to £1,260 for four years plus the current year’s allowance.
Backdating is especially useful for couples who may have overlooked this benefit in the past or who recently learned about it.
How Marriage Allowance Affects Tax Codes
Once HMRC processes your application, they adjust your tax codes:
- The transferring partner’s tax code will include an “N” suffix, indicating they’ve transferred part of their Personal Allowance (e.g., 1100N).
- The receiving partner’s tax code will include an “M” suffix, indicating they’ve received the transfer (e.g., 1300M).
This adjustment reduces the tax payable by the receiving partner throughout the tax year, rather than waiting for a rebate after the year ends.
Impact on Other Allowances and Benefits
Marriage Allowance does not affect your eligibility for other tax-free allowances, such as the Personal Savings Allowance or Dividend Allowance. It also does not impact Child Benefit, Universal Credit, or any other means-tested benefits. This makes it a straightforward tax-saving measure for eligible couples.
Common Mistakes to Avoid
Here are some common pitfalls when claiming Marriage Allowance:
- Claiming when both partners are higher-rate taxpayers: Only basic-rate taxpayers can benefit from the allowance.
- Both partners earning above the Personal Allowance: The transferring partner must have income below £12,570 to qualify.
- Assuming cohabiting couples qualify: Only married couples and civil partners can claim Marriage Allowance.
Case Study Example
Consider Jane, who earns £10,000 per year, and her husband Tom, who earns £35,000. Jane can transfer £1,260 of her unused Personal Allowance to Tom. Tom’s tax bill is reduced by £252, giving them more disposable income to support their family’s budget.
Reviewing and Cancelling Marriage Allowance
If your circumstances change—such as separation, divorce, or a change in income—you should inform HMRC as soon as possible. You can cancel the transfer at any time, and HMRC will update your tax codes accordingly to prevent over- or underpayment of tax.
Professional Advice and Planning
While Marriage Allowance is simple to apply for, tax planning can become more complex if your income varies or if you’re close to the higher-rate tax threshold. A tax adviser or accountant can help you make the most of your allowances and ensure compliance with HMRC regulations.
Conclusion
Marriage Allowance is an easy way for eligible couples to save money on their tax bill. By transferring part of the lower earner’s Personal Allowance to their partner, couples can save up to £252 a year in tax. It’s simple to apply online, can be backdated for up to four years, and won’t affect other allowances or benefits. If you think you might be eligible, check the HMRC website and start claiming this valuable relief today.
