Marriage Tax Allowance

For example, the taxpayer gets a pay rise which makes them higher rate for the year, the taxpayer has flexible income or the non-taxpayer starts working. 

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 £46,350 (£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 if overtime pushes us slightly above the threshold? We spoke to HMRC and it confirmed that what counts is how much you earn over the course of a tax year – so as long as the non-taxpayer earns less than £11,850 in a tax year, and the basic-rate taxpayer's total income is less than £46,350 (£43,430 in Scotland) for the same tax year, you'd be eligible.

It doesn't matter if overtime occasionally pushes you or your partner into the higher-rate tax band, as long as the basic-rate taxpayer's total income for the tax year doesn't exceed £46,350 (£43,430 in Scotland). If you do claim for the current year and end up going over the £46,350 (£43,430 in Scotland) threshold, any underpaid tax would be recovered through a tax code change the following year.

What if I've applied in error – will I be fined? Although it's highly unlikely your application would be accepted if you weren't eligible, you still won't be fined. If you were accepted, as above, any underpaid tax would be collected through a PAYE code adjustment.

Is there a cut-off date to apply? No, when you're applying for the current year, it's paid via changing your tax code over the remaining months of the tax year.

Can it be backdated? Yes, you will be allowed to claim back up to four years, but it only started in April 2015, so you can't go beyond that.

Do we have to apply every year? No. Your personal allowance will transfer automatically to your partner every year 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.

What happens if my partner dies after we've applied? If your partner dies after you've transferred £1,190 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.

Can I apply if my partner has died since 2015? Yes. A rule introduced in the Autumn Budget 2017 means widows or widowers can now claim up to £899 in backdated marriage tax allowance.

So if you and your spouse were eligible for it at any time from April 2015 (when the allowance was introduced) but you didn't claim before the death of your partner, you can now apply retrospectively.

You'll be eligible (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're eligible regardless.

HMRC says you could first apply for this from Wednesday 29 November 2017. You will 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 2015. It's likely documents you might need will include proof that a partner has passed away and evidence of income, eg, old pension statements - we'll update this guide when we've confirmed this with HMRC.

What happens if we divorce or dissolve our civil partnership? To cancel the allowance, you must contact HMRC.