Martin Lewis has shared how some married couples could be missing out on tax breaks, due to the Marriage Tax Allowance. The finance guru explained it’s part of the Government’s attempt to incentivise marriage by giving couples a tax break of up every year.
However, around two million qualifying couples are missing out. It allows spouses to transfer £1,260 of their Personal Allowance to their husband, wife or civil partner, reducing their tax by up to £252 per tax year.
And if you’ve been eligible for Marriage Tax Allowance for a while, but have not been claiming it, you can backdate it for up to four years. This could trigger a refund of up to £1,006 from HM Revenue and Customs (HMRC).
But there are some criteria you’ll need to meet to qualify for Marriage Tax Allowance, aside from the obvious. One person in the partnership must be a non-taxpayer, meaning they don’t earn more than their personal allowance.
This is £12,570 per year for most people. Mr Lewis explained on his ITV Money Show: “People say; ‘What about if I’m volunteering? What about if I’m part-time?’… If you don’t pay income tax, you’re a non-taxpayer.”
The other partner must be taxed at the basic rate of 20%. Meaning their total taxable income for the year is between £12,571 and £50,270.
To claim the Marriage Tax Allowance, the non-taxpayer partner can go to Gov.uk to apply to move 10% of their personal allowance to their tax-paying partner, roughly £1,260.
As a result, the non-taxpayer can still earn £11,310 before having to pay income tax. Meanwhile the tax-paying partner will now be able to earn £13,830 before their income tax kicks in.
This physically keeps an extra £252 in the household that the tax-payer would have otherwise handed over to HMRC over a year. Martin added: “You can claim back up to four tax years as long as you are eligible.”
He also highlighted that it must be the non-taxpayer applying for the tax break. He said: “Clearly, you can’t apply to take someone’s personal allowance.”
