Marriage Tax Allowance Explained
The new marriage tax allowance was introduced during April 2015 and can be used to reduce the tax of some married couples. The process is very different to what we’ve seen before, therefore, we thought a short blog on this topic would be useful for our clients and other readers of our blog.
This essentially relates to couples where one individual is a basic rate tax payer and the other half of the couple does not pay tax at all (which suggestions this person could be a non-earning spouse). The new allowance operates by allowing the basic rate taxpayer to share part of the non tax paying partners personal allowance (tax free income allowance). The personal allowance is currently set at £10,600 for the 2015 tax year.
The scheme allows the transfer of an unused personal allowance from one partner to the other up to a maximum of £1,060. This only applies if the partner receiving the transferred personal allowance is a basic rate taxpayer. During the 2015 tax year this means earning £42,385 or less.
How much will it save?
The maximum saving is £212 which represents 20% of the maximum transfer value of £1,060.
Your actual saving will depend on how much of your partners personal allowance remains. If your partner utilises most of their personal allowance and has less than £1,060 remaining then the tax saving will be less than £212.
How do I register?
To register you will need to make a formal claim via HMRC. This will then result in your tax code being changed to incorporate the personal allowance transfer from your partner.