Marriage tax allowance allows eligible couples to transfer £1,260 of their personal allowance to their spouse or civil partner to reduce how much tax they pay
Married couples may be able to offset some of the tax rises confirmed in the Budget by making use of a little-known government scheme.
Marriage tax allowance allows eligible couples to transfer £1,260 of their personal allowance to their spouse or civil partner to reduce how much tax they pay.
Your personal allowance is the amount you can earn each year before you start paying tax and this is currently set at £12,570. By transferring part of your personal allowance, for the current tax year, the higher earner in your couple would save £252.
You need to be married or in a civil partnership to claim marriage tax allowance, and you must have both been born on or after April 6, 1935.
One of you needs to be a non-taxpayer while the other person needs to be paying the basic 20% rate of tax. This usually means one of you earns less than £12,570.
The other person would be earning between £12,571 and £50,270, which makes them a basic 20% rate taxpayer. Higher or additional-rate taxpayers aren’t eligible for marriage tax allowance.
The non-taxpayer needs to be the one who applies for marriage tax allowance. Once your claim has been approved, you’ll then receive the tax benefit going forward.
You can claim back marriage tax allowance for the last four tax years. If you claim for this tax year and backdate the maximum four years, you’ll get up to £1,258.
For the current tax year, the higher earner will have their tax code adjusted so they pass less tax, while any tax owed for previous tax years will be sent by cheque.
It comes after Rachel Reeves announced she will extend the freeze on tax thresholds – meaning millions more workers will pay more in tax.
The income tax personal allowance – set at £12,570 – was meant to be frozen until April 2028. But in her Budget today, the Chancellor has announced she is extending this freeze for another three years.
It means income tax thresholds will now be frozen until the end of the 2030/31 financial year. The freezing of tax brackets is known as fiscal drag, as more people are dragged into higher tax brackets over time when their wages increase.
The Office for Budget Responsibility (OBR) estimates the freeze in tax thresholds would result in 780,000 more basic-rate, 920,000 more higher-rate and 4,000 more additional-rate income tax payers in 2029/30.
