Marriage Allowance: A small switch that can save you up to £252 tax bill

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.