Most Clinic weeks, someone leans across the desk and says, "are we missing out on that marriage tax thing?" After a quick cuppa and a look at two payslips, we've often found a tidy saving: sometimes enough to cover a weekly grocery shopping. I've seen it help newlyweds, long-standing civil partners, and couples where one person is cutting back their hours at work. So here is a rundown of what Marriage Allowance is, who qualifies, and how to claim it without any faff.
What is Marriage Allowance
If you are married or in a civil partnership, the Marriage Allowance lets the lower earner transfer 10% of their Personal Allowance to their partner. In plain terms, if one of you earns below £12,570, and the other pays basic-rate tax (England, Wales, Northern Ireland), you can cut the higher earner's tax bill by up to £252 a year. It's quick to sort.
A quick illustration
Amira and Ben are a married couple. Amira earns £10,000 (below the Personal Allowance), and Ben earns £28,000 (a basic-rate taxpayer).
Amira can transfer £1,260 of her un-used personal allowance to Ben, so Ben's income tax bill reduces by 20% x £1,260 = £252 for the year.
Even though Amira's own allowance drops slightly, she still pays no income tax because her income is below her reduced allowance.
Net result: the couple is £252 better off.
Who qualifies for Marriage Allowance (in a nutshell)
You are married or in a civil partnership.
The lower earner has income below £12,570.
The higher earner is not a higher-rate taxpayer.
How to claim Marriage Allowance (and where to read more)
You can apply for Marriage Allowance online. However, there are different ways to apply if:
you are registered for self assessment (claim within your online self assessment tax return), or
if you want to backdate your claim (yes, you can backdate your claim to 6 April 2021 for any years you were eligible for Marriage Allowance).
Here is a good starting point to read: https://www.gov.uk/apply-marriage-allowance
If one of you gets Universal Credit
"I am on Universal Credit - can we still use Marriage Allowance?" Yes, you can. There's no rule stopping it, but marriage allowance lowers the tax the earning partner pays, their take-home pay goes up a bit, and Universal Credit usually tapers down by 55p for every £1 of extra net pay, so you will still be better off overall, just by a slightly small amount. Also, depending on the circumstances, the Marriage Allowance might not help this year.
Quick example:
Pat is self-employed and usually receives a business profit of £35,000, Jo earns £10,000 a year. Post COVID, Pat's business is struggling and eventually Pat started receiving Universal Credit, this year, Pat is expecting a trading loss. With o basic-rate taxpayer in this quick example, there is nothing for marriage allowance to reduce, so it won't give Pat and Jo a saving right now.
Need more help?
If you would like help checking your eligibility, or running the numbers for your situation, feel free to drop an email to TAC@mdx.ac.uk to request an initial meeting.
For more information about Universal Credit, it is best to get in touch with your local Citizen Advice Bureau.
Deciding whether to operate as a self-employed individual, forming a partnership, or set up a limited company is one of the first and most important choices any entrepreneur will face. It affects how you pay tax, how much control you keep, and how your business can grow.
MDXTAC recently contributed a short guide for CB Plus to help their members understand the basic tax implications of each option. You can read it here:
This blog is designed as a starting point for anyone exploring business set-up options. If you are considering launching a venture or reviewing your existing structure, MDXTAC can act as a trusted sounding board, a critical friend to help you weigh up your choices with confidence before taking the next step.