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Marriage allowance explained

Find out about marriage tax allowance – what it is, how it works and whether you might be eligible to claim it – plus, other tax breaks available for married couples and civil partners.  

In this article
What is the marriage allowance? How does marriage allowance work? Who qualifies for marriage allowance?
Marriage allowance: your questions answered Other tax breaks for married couples and civil partners

What is the marriage allowance?

Marrying or entering a civil partnership with the person of your dreams doesn't just mean a bright and beautiful future together. It can also bring significant financial perks.

The marriage allowance is one of these, helping lower-earners pass over any unused tax-free allowances to their partner.

If you’re a low-earner and your spouse is a basic rate taxpayer, you can transfer the unused portion of your personal allowance to them.

The higher earning spouse will then receive a tax credit equivalent to the amount of personal allowance that has been transferred to them. This is deducted from the amount of tax they would usually have to pay.

The low earning partner’s pay before tax must be less than the personal allowance - which in 2018-19 is £11,850. In 2019-20 this will increase to £12,500.

The threshold for basic-rate taxpayers in 2018-19 for most of the UK is £11,850-£46,350, so the higher earning partner’s salary must fall between these boundaries.

In 2019-20, the threshold for basic-rate taxpayers will be £12,500-£50,000.

In Scotland, the thresholds for basic rate payers are different, so the higher earning partner’s salary would have to be less than £43,430. Those claiming marriage allowance in Scotland can continue to do so at the current rate of 20%. 

The 2019-20 income tax thresholds for Scotland have not yet been updated - they'll be announced at the Scottish Budget in December.

 

How does marriage allowance work?

To benefit from the marriage allowance, the lower earner must apply to HMRC to request any unused personal allowance can be transferred to their spouse.

Those earning less than the personal allowance can transfer a maximum of £1,190 in 2018-19 to their partner’s allowance. If you decide to transfer any of your unused personal allowance, you must transfer all of it.

If you earn less than £10,660 (the personal allowance, minus £1,190), you can do this without being liable to pay any tax.

In 2019-20, you'll be able to transfer £1,250 to a partner's allowance. You'll need to earn less than £11,250 to be able to do this without paying any tax.

In 2018-19, those earning above £10,660, but below £11,850 can still transfer £1,190 of allowance, but will become liable to pay tax on any income in excess of £10,660. Their partner still makes a tax saving of £238, but the extra tax they pay reduces the overall level of saving made by the couple.

This allowance will transfer to the spouse automatically every year unless you contact HMRC to cancel it, or your marriage comes to an end (either through divorce or death).

Who qualifies for marriage allowance?

In order to qualify for the marriage allowance you must fulfil the following criteria:

  • Be married or in a civil partnership.
  • Be born after 5 April 1935. If one or both of the couple are born before this date, you should claim the ‘married couple’s allowance’ instead. 
  • Have one partner with a salary below the personal allowance, and one partner earning more than the personal allowance paying the basic rate of income tax.

If your partner died after 5 April 2015

If your partner has died since 5 April 2015, it is possible to backdate your marriage allowance claim to include any tax year since 5 April 2015 that you were eligible to receive it.

To receive backdated marriage allowance, phone the HMRC Income Tax helpline. If your partner was the lower earner in the couple, the person responsible for managing their tax affairs will need to be the one to call HMRC.

Take our quiz to find out if you’re eligible and where to find more information:

Marriage allowance: your questions answered

Not sure how the marriage allowance works or how it applies to your situation? Find answers to commonly-asked questions about the marriage allowance and how it applies.

Can the marriage allowance be backdated?

If you were eligible for marriage allowance in 2015-16, when it was first introduced, you can backdate your claim for up to four years. 

This means that you could claim 2015-16's allowance of £212 and 2016-17's allowance of £220 in this tax year.

Will the marriage allowance change my tax code?

Usually, yes. The recipient partner’s tax code will usually change to ‘M’, to show they are receiving marriage allowance from their spouse. 

If the partner who transferred their personal allowance is in employment, their tax code will change to ‘N’, showing they have elected to use the marriage allowance.

Is marriage allowance taxable?

No, marriage allowance is a way of paying less tax if one partner is not using all or any of their personal allowance.

How does the marriage allowance get paid?

Marriage allowance isn’t something that’s paid to you – instead, it’s a tax relief for a partner who pays the basic tax rate.

They’ll be taxed on a smaller proportion of their salary, so the extra money will be received whenever they get paid each week or each month.

However, if you’ve applied for backdated marriage allowance from previous years, this amount will be sent by cheque in the post.

How do I cancel my marriage allowance?

To cancel a marriage allowance transfer, you should contact HMRC – you can do this online or by calling 0300 200 3300.

The marriage allowance arrangement will automatically be cancelled if the marriage ends through divorce or death.

Can I claim marriage allowance if I'm not working?

Yes, if you’re not working you can transfer 10% of your personal allowance to your partner – but they must be earning, and be a basic rate taxpayer.

Can self-employed people claim the marriage allowance?

Yes, as long as one partner earns less than £11,850 and the other earns between £11,851 and £46,350. 

If the recipient partner files a self-assessment tax return, marriage allowance will reduce their self-assessment bill.

Can you claim marriage allowance while on maternity leave?

Yes. If, while on maternity leave, your income falls below £11,850, you can apply to transfer 10% of your personal allowance to your spouse.

Can higher rate taxpayers get marriage allowance?

No, marriage allowance is only for basic rate taxpayers with partners who earn less than the personal allowance.

What if I stop being eligible for marriage allowance part-way through a tax year?

If your circumstances change – ie. perhaps the non-taxpaying partner starts earning more than £11,850 and is then required to pay basic rate tax – HMRC will not know until the end of the tax year.

At this time, it will send a P800 calculation form and recover any tax you owe by adjusting your tax code for the next tax year, or by adding it to your self-assessment tax bill if you’re self-employed.

Other tax breaks for married couples and civil partners

If you're married, you may be eligible for other tax breaks - find out which ones below.

And if you pay by self-assessment, you can get a head start on your 2017-18 tax return with the Which? tax calculator. Tot up your tax bill, get tips on where to save and submit your return direct to HMRC with Which?. 

 

Married couple's allowance

 

Easy to confuse with marriage allowance, due to its similar name, married couple’s allowance is a very different tax break.

One or both halves of the couple must be born before 5 April 1935 to be eligible, and means you and your spouse can reduce your tax bill by up to 10%, depending on your earnings.

Find out more: married couple's allowance - find out if you qualify

 

Inheritance tax

 

When one of you dies, the surviving spouse won't have to pay inheritance tax (IHT) on their partner's assets.

They'll also inherit their spouse's unused inheritance tax allowance, potentially doubling their IHT allowance when they pass on assets to the next generation.  

Find out more: inheritance tax for married couples and civil partners - all you need to know

 

Tax on savings and investments

 

If one of you pays tax at a higher rate, a simple way to save tax is to transfer some of your savings and investments to the person paying the lower rate.

There are no laws against spending or investing income earned from a spouse's investment.

The transfer has to be a genuine gift, though. You can't demand the money back if you get divorced or change your mind.

If you have investments in joint names, you'll each automatically pay tax on half the income - even if you own them in unequal shares.

Find out more: tax on savings and investments - how much will you have to pay

 

Capital gains tax

 

Married couples each have their own capital gains tax (CGT) allowances, but transfers between spouses are exempt from CGT.  

This means it's possible to transfer assets between one another to make the most of both spouses' annual CGT allowance. Transferring an asset into your joint names will have the same effect.

Once again, the transfer must be a genuine gift.

Find out more: capital gains tax explained - the ins and outs of this tax

 

Bereavement allowance

 

This is a payment from the government given to widows for up to 52 weeks. To qualify, you have to be between 45-years old and the state pension age when your partner dies.

Your entitlement depends on your age and your deceased partner's National Insurance contributions.  

A surviving spouse will also get automatic right of inheritance in the case of their husband or wife dying intestate, whereas an unmarried partner would not.  

Find out more: bereavement allowance - see if you qualify

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