Marriage Tax Allowance
Get a tax break worth up to £1,188
If you're married or in a civil partnership, you may be entitled to a £1,188 tax break called the marriage tax allowance – something 2.4 million qualifying couples miss out on.
WARNING: Beware googling 'marriage tax allowance'. Some shyster firms will charge you for applying (they try to look official), but it's FREE to apply. Follow our guide and the correct links below to do it safely and at no cost.
What is the marriage tax allowance?
The marriage tax allowance allows you to transfer £1,250 of your personal allowance (the amount you can earn tax-free each tax year) to your spouse or civil partner if they earn more than you.
If your claim is successful, it will lower the higher earner's tax bill for the tax year, but you can also backdate your claim if eligible.
Who can get the marriage tax allowance?
Only people with specific circumstances will be able to apply:
- You need to be married or in a civil partnership (just living together doesn't count).
- One of you needs to be a non-taxpayer, which usually means you'll earn less than the £12,500 personal allowance between 6 April 2020 and 5 April 2021 (see previous personal allowance rates).
- The other partner needs to be a basic 20% rate taxpayer (higher or additional-rate taxpayers aren't eligible for this allowance). This means you'd normally need to earn less than £50,000 (see previous tax year rates) or if you live in Scotland, £43,430 (see previous tax year rates).
- You both must have been born on or after 6 April 1935 (if not, there's another tax perk).
So, in a nutshell, one of you must be a non-taxpayer and one must be a basic-rate taxpayer.
Not sure if you're a non-taxpayer?
In rare circumstances, your personal allowance (the amount you can earn tax-free) may be different to the amounts above, but your tax code letter will tell you. This could be because you have a company car, you owe tax or your savings interest takes you over the threshold (see savings interest). For more guidance on tax codes, see our Free Tax Code Calculator.
If you earn above £50,000, but your pension contributions drop your take-home pay to under £50,000, you may still qualify for marriage tax allowance.
If you're on the pay-as-you-earn system (PAYE), HM Revenue & Customs should already be aware of how much you contribute to your pension. If you self-assess, make sure you specify how much you're contributing to your pension, so HM Revenue & Customs (HMRC) can see your take-home pay is below the £50,000 threshold.
If your pension contributions vary each month, or you're not sure whether you'll be a basic or higher-rate taxpayer in one particular year, HMRC recommends waiting until the end of that tax year and deciding then whether to apply or not.
How much can I get?
Marriage tax allowance for the current tax year, 2020/21, is worth up to £250.
And in addition to this year's allowance, you can also backdate your claim by up to four tax years (currently 2016/17, 2017/18, 2018/19 and 2019/20). The amounts for each year are worth up to:
- 2020/21 – £250
- 2019/20 – £250
- 2018/19 – £238
- 2017/18 – £230
- 2016/17 – £220
This means that if you claim for this tax year and backdate the maximum four years, you'll get up to £1,188. You won't have to tick any boxes or make a special request for this – it'll happen automatically.
The rest of this guide uses allowances and thresholds for the 2020/21 tax year, though as we say above you can also claim for previous tax years.
How the marriage tax allowance is calculated
The partner who has an unused amount of personal allowance can transfer £1,250 of their allowance to the other (so basically 10% of the full allowance). They can only transfer £1,250 – no more, no less.
This is how it works:
Part-time Peter works just enough and earns £5,000 at his local fish and chip shop. His full personal allowance for the year is £12,500, so he has plenty of spare allowance to transfer £1,250 to his wife.
Peter's wife, full-time Fiona, is a software developer. She earns £35,000 and is a basic-rate taxpayer (higher-rate tax starts at £50,000 for most). Her personal allowance increases by £1,250 to £13,750 when Peter chooses to make his transfer.
So she has an extra £1,250 which she would've paid tax on at 20%, but is now tax-free, so she's £250 up (20% of £1,250).
How and when will I get the money?
It depends on which year you're claiming for:
- For the current tax year, the higher earner will simply pay slightly less tax on their take-home pay. This is done by adjusting the recipient partner's personal tax code. The partner who transferred their personal allowance will also receive a new tax code, if employed.
- How long will it take until you see a change to your take-home pay? It usually takes two days to get a new tax code. But when you'll see a difference to your pay depends on whether your employer gets it in time to meet the cut-off date for their payroll, eg, if you get paid on the 25th each month and your employer gets your new tax code on the 10th, it's likely to be applied that month, but if they only receive it on the 23rd you'll probably have to wait for another month.
- Self-employed? If you're self-employed, your self-assessment tax bill will be reduced as HMRC will take into account that you've now got a bigger allowance.
- If you're backdating for previous years, you will get a payout. You can either get it via a bank transfer or receive a cheque.
- How long will it take until you get the money? If you've submitted your claim online, it will take around two weeks for HMRC to process and for you to see the money in your account. If you've submitted a form by post, HMRC says it will take between 24 and 29 working days after receipt to get the money.
How to apply for marriage tax allowance
It really is very simple, and only takes a few minutes – just use the application at HMRC. To do it, you'll need both your national insurance numbers and one of a range of different acceptable forms of ID for the non-taxpayer.
If there's a problem doing it via the web, just call 0300 200 3300 and do it by phone.
It's worth noting you can only apply for those years in which you both met the criteria. So, for example, if you earned more than the £12,500 personal allowance in 2019/20, HMRC won't allow you to claim it.
It's the non-taxpayer who must apply to transfer their allowance.
If the taxpayer applies, you're doing it the wrong way round and it won't work.
After going through the application process, you'll immediately be informed that your application has been received via email (you can apply over the phone too). If you were also eligible for the allowance in previous tax years, you'll have to select this option as part of the application process.
Although the onus is on you to check you're eligible, HMRC will write to inform you if you're not – although you may have to wait a few weeks.
There's no cut-off date to apply (but if you want to apply retrospectively all the way back to tax year 2016/17, you need to do so before 6 April 2021). When you're applying for the current year, it's paid via changing your tax code over the remaining months of the tax year.
You do NOT have to apply every year. Your personal allowance will transfer automatically to your partner until one of you cancels the marriage allowance or you inform HMRC that your circumstances have changed, eg, because of divorce, employment pushing you into a higher-rate tax threshold or death.
Once you've applied, you (or your partner) will get the extra allowance either:
- By changing the higher earner's tax code, which can take up to two months, OR
- When they file their self-assessment tax return.
Be careful if the non-taxpayer is only just below the tax threshold
We're sometimes asked whether there are case scenarios when it's NOT worth applying for marriage tax allowance. It's a legitimate question to ask, as there actually is a scenario where applying for marriage tax allowance might leave you out of pocket. There's also a scenario where the non-taxpayer will start to pay tax, though not enough to offset the gain.
We run through these two scenarios here, with examples to help...
If one's a non-taxpayer earning just below £12,500 and the other's a basic taxpayer earning comfortably above
If you're the non-taxpayer and you earn slightly below £12,500, then by transferring £1,250 of your personal allowance to your partner you will likely start having to pay income tax (oh no!).
However, in most cases like this it'll STILL be worth you applying for marriage tax allowance – provided your partner comfortably earns above £12,500. Even if you've now got an income tax bill, the tax saving your partner makes should outweigh the loss you're incurring. Here's an example:
Peter earns £11,900 and is a non-taxpayer (as the personal allowance is £12,500). His wife Fiona earns £16,000 and is a basic-rate taxpayer (she's charged 20% on the £3,500 above £12,500). If Peter decides to transfer some of his personal allowance to Fiona, he'll have no choice but to transfer the full £1,250. That leaves him with a personal allowance of £11,250 (that's £12,500 minus £1,250) and bumps Fiona's personal allowance up to £13,750 (that's £12,500 plus £1,250).
Peter now earns £650 more than his personal allowance (which is £11,250), meaning he'll pay basic-rate tax for the year of £130 (20% of £650). Meanwhile, the £1,250 personal allowance increase Fiona gets means she'll get to keep an extra £250 (equivalent to 20% tax on £1,250). The net gain for Peter and Fiona therefore is £120.
If one's a non-taxpayer earning just below £12,500 and the other's a basic taxpayer earning just above
This is the scenario where applying for marriage tax allowance may actually leave you out of pocket. This happens when the loss incurred by the non-taxpayer outweighs the gain made by the taxpayer. Let's use another example to explain this:
Peter earns £11,900 and is a non-taxpayer (as the personal allowance is £12,500). His wife Fiona earns £12,800 and is a basic-rate taxpayer (she's charged 20% on the £300 above £12,500). If Peter decides to transfer some of his personal allowance to Fiona, he'll have no choice but to transfer the full £1,250. That leaves him with a personal allowance of £11,250 (that's £12,500 minus £1,250) and bumps Fiona's personal allowance up to £13,750 (that's £12,500 plus £1,250).
Peter now earns £650 more than his personal allowance (which is £11,250), meaning he'll pay basic-rate tax for the year of £130 (20% of £650). Meanwhile, the £1,250 personal allowance increase Fiona gets means she'll get to keep an extra £60 (equivalent to 20% tax on £300 – the amount she was paying tax on).
The net loss to Peter and Fiona is £70 – showing that in this circumstance, couples could lose out.
So if you're earning near the £12,500 basic-rate income tax threshold, look carefully at the tax gain and loss each of you would have before you commit to transferring the allowance to your partner.
We've been inundated with emails from MoneySavers who've had their tax codes changed, and got money back. Here is some inspiration...
I made a claim for this year and previous years. I was amazed to get a rebate of £1,100. My wife is terminally ill and this money will enable us to tick off another part of her bucket list. I cannot tell you how grateful we are.
Thanks for your info, we got a cheque for £923.52 within a week of applying.
- Kevin & Sue
As my hubby only retired in April, I didn't think I was eligible for the marriage tax allowance. It took two minutes to fill in the form – five days later, the tax code had been changed and we'd had a £655 refund.
Although it's unlikely your application would be accepted if you weren't eligible, you still won't be fined. If you were accepted, any underpaid tax would be collected through a PAYE code adjustment.
Applying can prompt HMRC to look at your tax position. As millions are on the wrong tax code, for some this means getting notes that they owe HMRC money (for others, notes that it owes them). If this happens, some people blame the marriage tax allowance – yet actually all that's happening is your application has crystallised HMRC to look at an existing problem. At some point, you'd have needed to pay that anyway.
It's all about what counts as a non-taxpayer, and it does get complicated as there's something called the tax-free savings allowance for lower incomes, which is a separate £5,000 tax-free allowance for people who just have income from savings.
The crucial part is that even if you have savings interest, as long as you're not a taxpayer, you can still apply for and benefit from the marriage tax allowance.
Some people have reported difficulties applying online. If this is you, call HMRC on 0300 200 3300 for help.
If that happens, HMRC will not know until the end of the tax year thanks to the way tax is calculated. It doesn't matter even if the taxpayer is occasionally pushed into the higher-rate tax band, as long as their total income for the tax year doesn't exceed £50,000 (£43,430 in Scotland).
At the end of the tax year HMRC will reconcile your tax affairs, send a P800 calculation and recover any tax due in the following year through an adjustment to your tax code to claw it back via the payroll (or self-assessment for the self-employed).
What counts is how much you earn over the course of a tax year – so as long as the non-taxpayer earns less than £12,500 in a tax year, and the basic-rate taxpayer's total income is less than £50,000 (£43,430 in Scotland) for the same tax year, you'd qualify.
If you do claim for the current year and end up going over the threshold, any underpaid tax would be recovered through a tax code change the following year.
If your partner dies after you've transferred the £1,250 allowance to them, their estate will be treated as having an increased personal allowance (ie, less tax will be taken from the inheritance) while your own personal allowance will revert back to what it was before the transfer.
If your partner transferred some of their personal allowance to you before they died, your own personal allowance will stay at the higher level until the end of the tax year, while their estate will be treated as having the lower amount.
So if you and your spouse qualified for it at any time from April 2016 but you didn't claim before the death of your partner, you can now apply retrospectively.
You'll qualify (assuming you meet the criteria above) for a payment for any year in which both of you were alive – and, even if your partner died on day one of the tax year, you'd get the payout for the whole tax year. Meanwhile, it doesn't matter if the taxpayer or the non-taxpayer has died, you'll qualify regardless.
You'll need to apply over the phone and the adviser will take you through the process. Again, you'll only be able to backdate as far as April 2016.
There's a different, better allowance available to you that HMRC is phasing out. If one of you is 85 or over, you could qualify for the married couple's (and civil partner's) allowance. This could give you a reduction on your tax bill of up to £907.50 a year. However, if you're an unmarried couple (even if you're living together), you get nowt.
Quite simply, yes. This is a Government policy to reward the institution of marriage – its view being that marriage provides a more stable family.
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