The Association of Taxation Technicians (ATT) is reminding married couples and those in a civil partnership not to miss out on making a Marriage Allowance claim this Valentine’s Day.
If you earn less than £11,500 and your spouse or civil partner earns more than £11,500 but less than £45,000,1 then you can show them you care by making them a gift of some of your personal allowance – it could save the higher earner up to £230 for the 2017/18 tax year.
It is estimated that four million couples are eligible to make this claim, but only 2.2 million couples have done so.2
Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said:
“This Valentine’s Day, instead of simply spending money on each other, how about also saving money together? Before you go out for the evening, we encourage you to take some time together to see if you are one of these couples who have yet to benefit.
“To make the transfer, the spouse/civil partner earning less than £11,500 can go online to ask HMRC to transfer 10 per cent of their personal allowance to their partner.3 It might not be the most romantic thing to do on Valentine’s Day, and it is impossible to gift wrap, but a claim could be worth a lot more than a box of chocolates.
“The Marriage Allowance was introduced in April 2015, and a couple can claim now for any tax years since that date in which they would have been eligible to make a transfer. Claiming for three years from 2015-16 to 2017-18 could result in a saving of up to £662 in tax.4
“One thing that the donor should watch out for is that there is no flexibility on the amount of the personal allowance that they can gift. The gift is fixed at 10 per cent of their allowance. In 2017-18, making the gift will leave the donor with a personal allowance of £10,350. If they earn (say) £10,500 in this year then they will have to pay tax on the £150 over their now reduced allowance. This will result in an income tax bill of £30 for the lower earner. As their partner will be saving £230, there is still a net saving for the couple of £200.
“Following changes announced at the 2017 Autumn Budget, it is still possible to claim for eligible tax years up to and including the tax year in which your spouse died. To make a claim in these circumstances either as the donor or recipient, call the Income Tax helpline on 0300 200 3300.”
Notes for editors
1. The partner’s income must be less than £43,000 where they are resident in Scotland.
2. See here for FOI request.
3. The tax reduction will be made by amending the recipient’s tax code if they are employed, or by amending their self-assessment return if they are self-employed.
4. The maximum £662 saving is calculated as follows:
|Tax Year||Personal allowance||10% transfer||
Maximum savings at 20%
5. Marriage Allowance should not be confused with the Married Couples Allowance which is a different form of relief for older couples. The latter is only available where one of the spouses/civil partners was born before 6 April 1935. It is not possible to claim both allowances in a tax year.