How does HMRC Marriage Allowance Work

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HMRC Marriage Allowance

The HMRC Marriage Allowance was introduced on 6 April 2015 but it is still estimated that 3.7m couple are not taking advantage of it.  The HMRC Marriage Allowance is a tax perk that allows one partner to transfer up to 10% of their unused personal allowance to another meaning that person can benefit from some additional tax free earnings. But as with any HMRC tax break it comes with certain rules.

Who Can Use the HMRC Marriage Allowance

To use the HMRC marriage allowance you and your partner must meet the following three pieces of criteria:

  • be married or in a civil partnership;
  • one partner does not earn anything or earns below the personal allowance (£11,850 for 2018/2019);
  • the other partner pays tax at basic rate (20% of earnings up to £34,500 for 2018/2019).

How Does HMRC Marriage Allowance Work

Here’s an example of how the HMRC marriage allowance works – Jack and Jill have been married for several years now and Jill has not been in work for personal reasons for the last 10 years.  Jack however is in employment earning £35,000 per year.  Since Jill has unused personal allowance for the tax year 2018/2019 she will be allowed to transfer 10% of this to Jack – that’s £1,185 (10% x £11,850).  By transferring this to Jack his personal allowance becomes £13,035 meaning he saves £237 in tax.

Claiming Backdated HMRC Marriage Allowance

If you were eligible for the HMRC marriage allowance in 2015/2016 when it was introduced, then you can actually make a backdated claim for up to four years.

In our example above Jill would be allowed to make a backdated claim as she has not worked for the last 10 years. This means Jack and Jill will benefit from a tax saving of £899 by putting in a backdated claim for marriage allowance.

Tax Year Personal Allowance 10% Transfer Tax Saving at Basic Rate
2018/2019 £11,850 £1,185 £237
2017/2018 £11,500 £1,150 £230
2016/2017 £11,000 £1,100 £220
2015/2016 £10,600 £1,060 £212

How to Apply for the HMRC Marriage Allowance

If you are employed then you can register online for marriage allowance HERE.  Alternatively you can call HMRC on 0300 200 3300 for help.  There will be a change to you or your partners tax code for the personal allowance transfer and it can take a couple of months to take effect, so don’t delay in getting the process underway.

If you are self employed and pay tax through the self assessment system, you can claim your entitlement to the Marriage Allowance on your tax return. Find out more about the HMRC Marriage Allowance when you are self employed HERE>>

Updated July 2018