Find out how the marriage tax allowance works, how much you can claim as a tax rebate and the forms you’ll need to use to take advantage of this income tax allowance (including if you’re self-employed).
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
How Does The UK Marriage Tax Allowance Work
The marriage allowance lets an individual transfer up to 10% of unused personal allowance to their partner. For the tax year 2022-23, the maximum amount of personal allowance that can be transferred is £1,260 meaning a potential tax rebate of £252 (£1,260 x 20%).
An Example of the Marriage Allowance Transfer
Mary decided to become self-employed in the tax year 2022-23 and the profits from her business were £5,000. Her partner Jo was in full-time employment and pays tax at the basic rate of 20%. They can benefit from the marriage allowance tax rebate because Mary has unused personal allowance.
Mary can transfer up to 10% of her unused personal allowance to Jo for 2022-23 of £1,260. By transferring this Jo’s personal allowance increases to £13,830 (£12,570 + £1,260). This equates to a tax saving of £252 (£1,260 x 20%).
Who Can Apply for the Marriage Allowance Tax Rebate
Every in the UK is entitled to apply for a tax rebate, as long as they meet all the following criteria:
- Be married or in a civil partnership;
- One partner does not earn anything or earns below the personal allowance (£12,570 for 2022/23 and 2021/22);
- The other partner pays tax at the basic rate of 20%.
Claiming Backdated Marriage Allowance Tax Rebate
You can backdate your claim for marriage allowance up to 4 tax years, to claim a rebate for any missed tax years. This equates to a potential tax saving of £1,004.
Marriage Allowance Rates 2022-23
|Tax Year||Personal Allowance||10% Transfer||Maximum Tax Saving|
How to Claim the Marriage Allowance Tax Rebate If You’re Employed
If you are employed by someone and receive a payslip, then you can apply online for marriage tax allowance on the .GOV website. Alternatively, you can apply by phone HMRC on 0300 200 3300 for help or fill in an R40 form which you can post back to them.
Once agreed by HMRC they will send your employer a notification to change your tax codes to reflect the transfer of personal allowance, so they end with:
- ‘M’ if you are receiving the allowance
- ‘N’ if you are transferring the allowance
It can take up to a couple of months to take effect, so don’t delay in getting the process underway that way you can benefit from the tax rebate sooner rather than later.
How to Claim the Marriage Allowance if You’re Self-Employed
If you are self-employed you’ll need to apply for the marriage tax allowance when you fill in your tax return. You will need to add details of your partner, including their national insurance number.
If your partner is employed, their employer will change their tax code so they receive the allowance. But if your partner is self-employed, then they will see a reduction in their tax bill when they file their tax return.
How to Cancel Marriage Allowance
Once you have applied for the allowance, it will be transferred every tax year moving forward, so you’ll need to make sure you cancel it if your circumstances change. Again you can do that online or by calling HMRC.