Married Couple’s Allowance and Marriage Allowance in the UK
The Government of the United Kingdom allows married couples and civil partners to benefit from allowances and tax relief for their living expenses. If one of the partners was born before April 5, 1935, and you’re married or in a civil partnership, you may be eligible for a married couple’s allowance.
Married couples’ allowance and marriage allowance in the UK is a British statutory scheme that provides financial support to married couples. The scheme was introduced in April 1971 and replaced the Married Women’s Allowance. It is administered by HM Revenue and Customs (HMRC) and is subject to income tax, National Insurance, and capital gains tax.
The allowances are paid from the tax-free Personal Allowances, which are also used to calculate the tax payable on pensions. Suppose a person receives a pension with the married couples’ allowance. In that case, they can then receive tax relief on the additional pension income.
If you are a married couple in the UK and need to know about your marriage allowance and spouse’s allowance, then this blog is for you.
If you are married or in a civil partnership, you can use the marriage allowance as an opportunity to help one another out financially by allowing one who earns lower to give their partner £1,260 of their allowance.
The higher-earning spouse will subsequently receive a tax credit equal to the amount of personal allowance that has been transferred to them, provided that they are a basic-rate taxpayer. This is subtracted from the tax they would have to pay otherwise.
To be eligible:
- The low-income partner’s pre-tax income must be less than the personal allowance (£12,570 in 2022-23).
- The salary of the higher-earning partner must be between £12,571 and £50,270 (which is also the threshold for higher-rate payers).
The basic-rate limits differ in Scotland; the higher-earning partner’s wage would be less than £43,462. In Scotland, those receiving marriage allowance can keep doing so at the present rate of 20%.
Married Couples’ Allowance
A married couple’s allowance will not increase the amount of money you earn before paying taxes. Instead, as a restricted allowance, it lowers your tax payment by 10% of the amount you’re eligible for. Your tax cost will be lowered by £364 if you obtain the minimal allowance of £3,640 in the 2022-23 tax year, up from £3,530 in 2021-22.
How does the Marriage Allowance Work?
To be eligible for the marriage allowance, the lower earner must request that any unused personal allowance be transferred to their spouse through HMRC. They can transfer £1,260 in 2022-23 to their partner’s allowance if one earns below the personal allowance threshold of £12,570 for 2022/23.
The lower earner must transfer all their unused personal allowances if they wish to do so. They can transfer their allowance without paying any tax if their earnings are below £11,310 (£12,570 – £1,260). If their earnings are above £11,310 and below the new threshold of £12,570, they will be liable for paying the tax.
However, their spouse still saves money on taxes, but the additional tax they pay diminishes the couple’s overall savings. Unless they contact HMRC to revoke it or their marriage ends, this allowance will automatically pass to their spouse or partner every year.
How the Married Couples’ Allowance Works
Married couples born before April 5, 1935, are eligible for the married couple’s allowance.
- The maximum married couple’s allowance for the 2022-23 tax year is £9,415.
- The maximum married couple’s allowance for the 2021-22 tax year was £9,125
Lower and Upper-Income Limits for Married Couples’ Allowance
It may be good to enroll in the Married couple’s allowance program depending on your earnings. You’ll be eligible for the total amount if you earn less than £31,400 in 2022-23 and £30,400 in 2021-22.
For every £2 you earn above this threshold, the MCA you are entitled to decreases by £1. However, there is a limit to how low it may go; even the highest incomes will be eligible for the minimum of £3,640.
The person who received the award is usually the husband, but suppose you’ve gotten married or become civil partners since December 2005. In that case, the person with the higher income can claim the married couple’s allowance, but their income will decrease. You can also transfer the unused portion of your married couple’s allowance to your spouse if your tax bill is too low to use it all.
Maintenance Relief and Married Couples’ Allowance
Maintenance allowance is available to married couples and civil partners. It lowers your tax cost if you provide maintenance to your ex-partner. You or your ex-partner must have been born before April 6, 1935, and your maintenance payments must be made under a legal contract.
Your tax bill will be lowered by the lesser of the following amounts:
- 10% increase to £3,640 for 2022-23. For 2021-22, 10% of £3,530 is set aside.
- 10% of the total amount you’ve paid.
Who Qualifies for Marriage Allowance?
To receive the marriage allowance, you must meet the following requirements:
- You must be married or in a civil partnership to qualify.
- You must have been born after April 5, 1935. If one or both partners were born before this date, the ‘married couple’s allowance’ should be claimed instead.
- Pay the initial income tax rate if one partner earns less than the personal allowance and the other earns more than the personal allowance.
What is Marriage Tax Allowance or Marriage Allowance?
A lesser-known fact is the Marriage Tax Allowance. It’s one of the simplest ways to transfer a part of one’s allowance, which is the tax-free amount received each year, from one person to another, provided they’re married or in a civil partnership. If you and your spouse/partner were born on or after April 6, 1935, you might be eligible for Marriage Allowance.
How does Marriage Tax Allowance Work?
Your allowance is an income you get because you’re married, so it’s yours to keep – and you can transfer £1,260 of your allowance to your spouse if they earn more than you. Doing so will help you reduce your tax liability by £252.
If you are a low earner, your net income must be less than £12,570 to get the full benefit from this agreement. It’s essential to know how much tax you will have to pay if you marry.
Couples who are either married or in a civil partnership may be eligible for a marriage allowance. It’s a tax benefit you may be able to claim.
Suppose the higher-earning partner is a basic rate taxpayer. In that case, the tax credit equivalent to the personal allowance will be received. This sum is deducted from the amount of tax they will have to pay in the future.
Who Can Apply for Marriage Tax Allowance?
- If you’ve been married or in a civil partnership for at least a year.
- The pay before tax of the lower-earning partner should be less than the personal allowance, which was £12,570 in 2022-23.
- Your application for Marriage Allowance will not be affected:
- If you or your spouse now receives a pension
- If you or your partner get a personal allowance and live abroad.
How to Apply for Marriage Tax Allowance
You can apply for a marriage allowance by filling out an online application. If your application is approved, any adjustments to your allowances will be retroactive to the beginning of the tax year, April 6.
Document Requirement to Apply for Marriage Allowance
You must submit both your and your partner’s national insurance numbers.
Suppose you come to the UK with no intention of studying or working. In that case, you will not be given a National Insurance number. However, you can be aided by Income Tax for marriage allowance UK.
You can use any of the following methods to establish your identity:
- The last four account number digits where your tax credits, pension, or child benefits are deposited.
- You can supply the last four digits of an interest-bearing account.
- Using your P60
- A copy of any of your last three payslips
- Your passport number as well as the expiration date
What if Your Partner Dies?
If one of the partners dies after a part of their allowance has been transferred to another one, then the higher personal allowance will be applied to their estate allowance. Their allowance will be restored to its average amount.
If your income is £8,000, you gave your partner £1,250 of your allowance. As a result, your allowance was £11,250, and theirs was £13,750. Their estate’s allowance remains at £13,750 when they die, while yours drops to £12,500.
If your couple gave you a portion of their allowance before they died, your allowance would be increased until the end of the tax year on April 5. Their estate allowance will be seen to have a smaller value.
Your partner has transferred £1,250 from their allowance to yours, making their allowance £11,250 and yours £13,750. If your partner dies, your allowance will remain at £13,750 until April 5, after which it will revert to the average amount. Their estate allowance has a personal allowance of £11,250 applied to it.
Suppose your spouse or civil partner dies while you haven’t claimed Marriage Allowance. In that case, our chartered certified accountants will help you lodge a retrospective claim on the tax year since April 5, 2015.
You will be Entitled to Married Couple’s Allowance.
If you’re married or in a civil partnership, you can take advantage of the Married Couple Allowance and reduce your tax bills by allowing one partner to get an income tax exemption on your earnings.
Married couples are entitled to an additional tax allowance, which can deduct their tax bills between £345 and £891.50 from their taxable income for the 2019-20 tax year. Suppose you marry or register a civil partnership with your civil partner. In that case, your allowance will be prorated for the remainder of the financial year. When there is a separation or demise, the allowance for the said person is kept until the end of the financial year.
You can also give your Married Couple’s Allowance to your spouse or civil partner as a gift. You can continue to claim Married Couple’s Allowance even if you and your spouse have separated but not divorced.
Am I Eligible to Claim Marriage Tax Allowance?
If you match the criteria listed below, you may be eligible for Married Couple’s Allowance; it’s the same as other allowances and is already discussed.
- If you’re married or in a civil union.
- If you and your spouse or civil partner live together.
- If you or your partner/spouse were born before April 6, 1935.
Suppose you cannot reside with your spouse/civil partner due to the circumstances listed below. In that case, you can continue to claim your Married Couple’s Allowance.
- If your spouse/partner is in residential care due to health difficulties or advanced age.
- You or your partner has a job that requires you to be away from home.
- Served in the military
- Either of you is in prison.
- You’re away from home for training or school.
How do I Claim Marriage Tax Allowance?
When filing your annual self-assessment tax return, you can claim your benefits by completing the Married Couple’s Allowance section of the form. Suppose you don’t file an annual self-assessment tax return. In such a case, you can contact HMRC for legal paperwork for a marriage or civil partnership ceremony and legal documents for a spouse or civil partner.
More Information on Married Couples’ Allowance
If you can’t spend the entire amount you were awarded when you applied for a Married Couple’s Allowance. In that case, you can transfer it at the end of the financial year.
Suppose one of the spouses/civil partners pays taxes. In such a case, another partner can quickly transfer any new Married Couple’s Allowance if they do not pay any taxes or their tax bill is not too high.
If you need to share or transfer your Married Couple’s Allowance, do it before the close of the financial year or the beginning of the next financial year.
The minimum amount of your Married Couple’s Allowance can be transferred or shared by either your spouse or civil partner. Couples can divide the minimal Married Couple’s Allowance between the two accounts or transfer the entire amount from one account to the other.
Before the new financial year begins, you must complete Form 18, and you can request a copy from HMRC.
Is it possible to get the marriage allowance backdated?
You can backdate your claim to any tax year you were eligible for Marriage Allowance after April 5, 2015.
Is it possible to obtain both the Marriage Allowance and the Married Couple Allowance simultaneously?
No. You cannot get both Marriage Allowance and Married Couple’s Allowance simultaneously.
What is the procedure for receiving the marriage allowance?
The marriage allowance is not a stipend; it is a tax break for a spouse who pays the initial tax rate. They’ll pay less tax on a smaller amount of their income, so they’ll have more money when they get paid each week or month. If you’ve asked for a backdated marriage allowance from past years, you’ll get a check in the mail for this amount.
Is it possible to apply for a marriage allowance while on maternity leave?
Yes. If your income falls below £12,570 while on maternity leave, you can request to have 10% of your allowance transferred to your spouse.
Is a marriage allowance available to higher-rate taxpayers?
The marriage allowance is only available to basic rate taxpayers, with spouses earning less than the personal allowance.
Jibran Qureshi FCCA is the Managing Director of Clear House Accountants and has over 13 years of experience in practice across multiple industries. Jibran’s educational background includes a Master’s in Financial Strategy from Oxford University and an Executive MBA from Hult International Business School. His experience in Financial Strategy, Tax Planning, Operational Consultancy and Performance Reporting guide his cognizant approach to leading Clear House and its clients to the future. This dexterity led him to be Enterprise Nation’s Top 50 Advisors. Jibran recognised the need to manage the innovative disruptions sustainably early on and shaped Clear House Accountants not just to be compliance specialists but advisors who help build complex ecosystems around cloud accounting software, provide advice on funding support, help manage innovative tax schemes, set up and implement complex strategic plans, and much more. So, his clients can thrive, not just survive.
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