What is the marriage allowance claims UK?
If your income is less than your personal allowance (£12,500 personal allowance for the tax year 2020/21), you can transfer 10% of your personal allowance or £1,250 to higher earner civil partner under certain conditions to reduce their bill or provide the tax relief up to £250 for the tax year 2020/21 and each year that is also known as marriage allowance.
In simple words, Marriage allowance is an unused or tax-free transfer of 10% or £1,250 of personal allowance(£12,500 for tax year 2020/21) by low earner partner (earns less than the personal allowance) to higher earner civil partner (earns higher than the personal allowance) for the purpose to reduce the tax bill of recipient partner up to £250 (£1,250 × 20/100) each year.
Eligibility criteria: Who can apply for marriage allowance?
Can I claim marriage tax allowance?
To qualify to apply for marriage allowance:
- Both partners must be in a civil partnership or married.
- One of the partners earning for the tax year 2020/21 must be up to £12,500 or less than personal allowance or must be non-taxpayer.
- Other partner-earning must be higher than personal allowance (£12,500) for the tax year 2020/21 or in between £12,501 to £50,000 and must be a basic rate taxpayer.
- Both partners were born after 6th April 1935.
Marriage allowance UK tax calculator 2020:
Lower earner or partner with an unused tax-free personal allowance must transfer £1,250 personal allowance to higher earner wife, husband or civil partner or claim for marriage allowance to HMRC to get the benefit as a couple for the current year.
For example, as John earning is £8,000 for a tax year 2020/21 and unused full personal allowance that is £12,500, so he is a non-taxpayer
As his wife Jade earning is £32,000 for the tax year 2020/21 and her full personal allowance is £12,500, so she is a basic rate taxpayer on her taxable income calculated as
- Taxable income = income for the year of 2020/21 – personal allowance
- Taxable income = £32,000 – £12,500 = £19,500
- Income tax at basic rate or 20% = 20/100 × £19,500 = £3,900
So, John will transfer 10% of his unused personal allowance to his wife to reduce her tax bill calculated as
- 10% × £12,500 = 10/100 × £12500 = £1,250
By this transfer, Jade personal allowance increases from £12,500 to £13,750 as:
- Total personal allowance after transfer = full personal allowance for the year 2020/21 + 10% transfer of personal allowance from civil partner
- Total personal allowance after transfer = £12,500 + £1,250 = £13,750
She is basic rate taxpayer and pays income tax at the rate of 20% on her taxable income as:
- Taxable income = total yearly income – personal allowance after transfer
- Taxable income = £32,000 – £13,750 = £18,250
- Income tax at the basic rate of 20% on taxable income = 20/100 × £18,250 = £3,650
So, 20% of this transferred marriage allowance would reduce her taxable income that would result in deduction of tax bill up to 250 of Jade as
- 20% of transferred marriage allowance = 20/100 × £1,250 = £250
Or she will be liable to pay tax £3,650 on taxable income £18,250. John will not liable to pay any tax on this transfer of 10% of his personal allowance because his income is less than his personal allowance.
If John’s income was £11,400 or more than £11,250, that would be above his personal allowance (£12,500- £1,250= £11,250) and he would pay some tax on the transfer of personal allowance to his civil partner. For example
|John Income for the year of (2020/21)||£11,400|
|John personal allowance (2020/21||£12,500|
|10% transfer of personal allowance||
10/100 × £12,500 = £1,250
|Personal allowance after transfer 10% of it||
£12,500 – £1,250 = £11,250
|John taxable income||
£11,400 – £11,250 = £150
So, if John’s income was £11,400 for the tax year 2020/21, he would pay tax on £150 and Jade would pay tax on £18,250 and as a couple, they would pay tax on
Total taxable incomes of couple = £18,250 + £150 = £18,400
Income tax at 20% of basic rate on taxable income = £18,400 × 20/100 = £3,680
As they would pay tax on £18,400 rather than £19,500, so they would have tax saving of £220 as a couple for tax year 2020/21.
What is the marriage allowance for 2019/20 and 2020/21?
You can claim £1,250 marriage allowance for the year of 2019/20 2020/21 on your personal allowance that is £12,500 or can get £250 tax relief as a couple.
Marriage allowance transfer 2018/19:
Marriage allowance transfer for the tax year 2018/19 can be claimed up to £1,190 on the personal allowance that was £11,850 or you can save tax up to £238 as a couple. For the year of 2017/18, up to £1,150 marriage allowance can be claimed on your personal allowance that was £11,500 or you can get a tax saving up to £230 as a couple, For the year 2016/17, up to £1,100 marriage allowance can be claimed on the personal allowance that was £11,000 or you can get tax benefit up to £220 as a couple.
Can I claim marriage allowance for previous years or how many years can you claim back marriage allowance?
Applied for marriage allowance retrospectively:
As marriage allowance implemented or brought in on 6th April 2015, then you can apply for marriage allowances retrospectively for up to four previous years from the year of 2016/17 to current year 2020/21. If you had allowable personal allowances, fulfil the above conditions for marriage allowance for previous years, had reduced tax bill for the previous years and if HMRC approved your application to backdate your claim or apply for marriage allowances for previous years. For example, by summing the value of marriage allowances or claims of the previous 4 years and the current year, you can make a total claim or get tax saving calculated as
Total claim or tax saving = £250 + £238 + £230 + £220 + £250 = £1,188
Cancel marriage allowance:
If your circumstances have changed due to your income has changed, divorce with your partner and death of your partner, then one of you can cancel marriage allowance by going to HMRC website online to inform or by making a call at HMRC contact number 0300 200 330.
How long does it take to get a cheque for marriage tax allowance?
Recipient partner will get the marriage allowance once HMRC changed the recipient code that can take two months to change the code or when the recipient partner files their self assessment tax return. Instead of receiving marriage tax allowance cheque from HMRC recipient partner can choose to pay less tax by using marriage allowance or can adjust their self assessment tax bill if the recipient partner is self-employed.
Do I need to claim a marriage allowance every year or do you get marriage allowance every year?
No, you don’t need to claim marriage allowance every year. If you have applied for marriage allowance once i.e., for the tax year 2020/21, then allowance will be renewed and transfer to recipient partner automatically every year unless one of you or lower earner (who made the marriage allowance claim) notified to HMRC to cancel it due to change in circumstances.
Can unemployed, self-employed, people on maternity leave, stay at home parents, and retired claim marriage allowance?
Yes, self-employed, unemployed, people on maternity leave, retired and stay at home parents can claim for marriage allowance and can transfer 10% of their personal allowance to their civil partners.
What is the tax code for marriage allowance?
Once you transferred marriage allowance you and your partner tax codes will be changed. You will get the new tax code ends with N If you are transferring your 10% marriage allowance and your partner tax code will also get new tax code ends with M if he is the receiver of allowance.
Can you claim married couple’s allowance and marriage allowance?
You may apply for more beneficial married couple allowance if you and your partner or one of you were born before 6th April 1935 and if both of you must be in a civil partnership and it will reduce your tax bill between £351 and £907.50 a year but you cannot claim for married couple’s allowance and marriage allowance at the same time.
Requirements to apply for marriage allowance online:
As you have to apply online for marriage allowance on the HMRC website or to transfer 10% of your personal allowance, so, you need to keep the following information ready before going to apply:
- You and your partner national insurance number
- To prove your identity, you need last 4 digits of your child benefit, tax credits or pension account, P60 details, 3 most recent payslips details, your passport number and expiry date.
How do I apply for marriage allowance by phone?
In another case, if you cannot apply or face issue in applying online, you can call to HMRC at 0300 200 3300 to apply for the marriage allowance.
Disclaimer: Please note the information in this blog above is for information only. It must not be used as advice to act upon and any specific questions should be discussed with one of our staff at Berkshire Accountants Limited.