The Marriage Allowance, also referred to as the Transferable Allowance for Married Couples and Civil Partners, was introduced on 6 April 2015. What is it? How can I claim it?
This is a freeview 'At a glance' guide to the Marriage Allowance.
From 6 April 2015, a spouse or civil partner who is not liable to Income Tax above the basic rate may transfer 10% (£1,260 for 2022-23 and 2023-24) of their personal allowance to their spouse or civil partner, provided that the recipient of the transfer is also not liable to Income Tax above the basic rate.
This acts as a tax reducer, rather than an increase of personal allowance for the recipient spouse. The recipient's tax is reduced by the transferred amount multiplied by the basic rate, or Scottish basic rate of Income Tax as the case may be. The maximum tax reduction for the transferee is £252 for 2022-23 and 2023-24.
You cannot choose to transfer a lower amount to your spouse or civil partner, it has to be the maximum amount of 10% of your personal allowance. If your income is less than the personal allowance but not less than 90% of the personal allowance you may have tax to pay as a result of the transfer.
Taxpayers have four years in which to make the claim. You can backdate your claim to include any tax year since 5 April 2015 that you were eligible for Marriage Allowance within the four-year claim period.
The Marriage Allowance may be claimed if all the following apply:
- You are married or in a civil partnership.
- You are not for the tax year, liable to tax at a rate other than the basic rate, the dividend ordinary rate or the starting rate for savings. If you have income above the personal allowance a transfer may not benefit you and your spouse/civil partner as a couple.
- Your spouse or civil partner has an annual income of between £12,570 and £50,270 (2022-23 and 2023-24 rates).
- No claim has been made for a Married Couple's Allowance, which is available where one or both of the couple were born before 6 April 1935.
For postal claims, a new form will be made available on 12 February 2024. This will include a nomination section to be completed where any repayment due should be made to a third party, such as an agent. This new form must be used for claims made from 26 February 2024: claims thereafter using the old form will be rejected. Either the new or old form can be used in advance of 26 February 2024.
PAYE tax codes
PAYE codes will be adjusted as follows:
- M for the spouse receiving the allowance.
- N for the spouse transferring the allowance.
Transfer of allowance on death
In his Autumn 2017 Budget, the Chancellor announced that it would be possible to claim Marriage Allowance where one or both spouses had died during the tax year. The claim can be made after 29 November 2017 and can be backdated for up to four years, though not before 6 April 2015. This is included in Finance Act 2018. The change means that an election is available to couples on death where it was not previously in life because one of them was a higher rate taxpayer. If, in the year of death, the higher-earning deceased spouse or civil partner's income remains within the basic rate band because of their death, the transfer will be available, whereas in previous years their income levels may have been too high.
Where it is the transferor who dies, the transferee retains their full personal allowance for the year whereas when it is the other way around, i.e the transferee dies, their allowance is reduced accordingly. Depending on income levels it may be more beneficial for the surviving spouse to transfer to the deceased rather than vice versa.
Separation and divorce
The allowance ceases to be available for transfer the year after divorce or the dissolution of a civil partnership. There is no requirement for spouses or civil partners to be living together when transferring or receiving the allowance meaning it can still be transferred after separation.
Sections 55A - 55E Income Tax Act 2007 contain the rules on the Marriage Allowance tax reducer and were introduced by Finance Act 2014, with effect from 6 April 2015.