Published: December 22nd, 2016 in Latest News
Marriage Allowance is a handy tax benefit that many people are unaware of.
For those couples who are eligible, it allows you to transfer up to £1,100 of your personal tax allowance to your spouse or civil partner. This could translate to a tax saving of around £220, and potentially as much as £430 if you qualify to submit a back dated claim for the 2015-16 tax year.
Are we eligible?
Those eligible for Marriage Allowance must fulfil the following criteria:
- You must be married or in a civil partnership
- Your income must be below £11,000
- Your partner must earn between £11,001 and £43,000
How do we apply?
The quickest and easiest way to apply for Marriage Allowance is via the internet. It can be accessed via www.gov.uk and doesn’t take long to complete.
If your application is approved, alterations will be made to your personal allowance that will ensure you start saving. This can happen in two ways – either your partner’s tax code will be altered to reflect the additional allowance; or, if they’re self-employed, it will be calculated when your partner submits their self-assessment tax return.
Once established, your Marriage Allowance will automatically transfer each year until HMRC are informed of a cancellation, or your personal situation changes through divorce or bereavement.
How do we cancel?
Either partner can cancel the Marriage Allowance if necessary, again by following the instructions online at www.gov.uk.
Should you get a divorce and wish to restore your allowance to its previous level, there are two options available if you are transferring your allowance to your partner – you can continue transferring it until the end of the current tax year, or you can back date any changes to the beginning of the tax year. For individuals who wish to stop receiving their partner’s allowance, it will not change until the end of the tax year.
If your partner passes away whilst you are receiving Marriage Allowance, your allowance will return to its full entitlement whilst your spouse’s estate will continue to be treated with the increased personal allowance.
It’s also worth bearing in mind that if your income changes, you must contact HMRC. They will be able to advise as to whether claiming Marriage Allowance will still be cost effective for you as a couple, or as to whether you need to cancel the Marriage Allowance you are receiving.
As always with matters relating to tax and personal finance, TFMC are always on hand to help. If you have any outstanding questions or need some reliable advice, get in touch and we’ll be happy to help.