Marriage Allowance Tax Rebate 2020/21

I’ve updated this post on 18 April 2020

Here’s how you can apply for the Marriage Allowance, a scheme from HMRC that lets one partner transfer up to 10% of their unused personal allowance to another. This means that one person can benefit from some additional tax-free earnings.

It can be particularly useful if you are newly self-employed, are still building up your income or income has taken a dip.

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:

  1. Be married or in a civil partnership;
  2. One partner does not earn anything or earns below the personal allowance (£12,500 for 2020/21 and 2019/20);
  3. The other partner pays tax at the basic rate of 20%.

How Does The Marriage Allowance Work

Here’s an example of how the marriage allowance works.

Mary went self-employed in the tax year 2020/21 and the profits from her business were £5,000 as she was in the start-up phase.  Her partner Jo, was in full-time employment and pays tax at the basic rate of 20%. Under the rules of HMRC marriage allowance, Mary can transfer up to 10% of her unused personal allowance to Jo of £1,250 for 2020/21 (£12,500 x 10%).  By transferring this Jo’s personal allowance increases to £13,750 (£12,500 + £1,250).

This equates to a tax rebate of £250 at 20%.

Claiming Backdated Marriage Allowance Tax Rebate

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

This means you and your partner could benefit from a tax saving of £967 looking back from the current tax year.

Tax YearPersonal Allowance10% TransferMaximum Tax Saving
The Marriage Allowance Tax Rebate

How to Claim the Marriage Allowance Tax Rebate If You’re Employed

If you are employed by someone, then you can apply online for marriage allowance HERE on the .Gov website.  Alternatively, you can apply by phone HMRC on 0300 200 3300 for help.  Your employer will be notified by HMRC to change your partners’ tax code to reflect the transfer of personal allowance.

It can take up to a couple of months to take effect, so don’t delay in getting the process underway.

How to Claim the Marriage Allowance If You’re Self Employed

If you are self-employed you’ll need to apply for marriage allowance on your self-assessment tax return form.  You will need to add details of your partner, including their national insurance number.

Marriage allowance
Self-Assessment and the Marriage Allowance Tax Rebate

If your partner is employed then an adjustment will be made to their tax code by their employer. If both you and your partner are self-employed, then the recipient will see a reduction in their self-assessment tax bill when they file their tax return.

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Anita Forrest
About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of - a UK small business finance blog where she shares help and advice with the self-employed community to make topics like registering a business, bookkeeping and taxes easy to understand.