UK Married Couples May Claim £252 Tax Break and over £1,000 Lump Sum – Check Your Eligibility

November 13, 2023
4 min

In the United Kingdom, married couples and civil partners can benefit from a significant financial boost by claiming the Marriage Allowance. This tax break can reduce your tax bill by £252 per year but also offers the possibility of a lump sum payment of up to £1,000. 

In this article, we will guide you through the details of the Marriage Allowance, eligibility criteria, and how to check if you qualify for this financial perk.

What is Marriage Allowance?

The Marriage Allowance is a tax relief scheme by the UK government to help married couples or civil partners save money by allowing the lower or non-earner to reduce the tax their partner pays. It allows one partner to transfer a portion of their unused personal allowance to their spouse or civil partner, reducing their overall tax liability.

In essence, most individuals in the UK have a Personal Allowance, which typically amounts to £12,570 – the income threshold on which they are not required to pay taxes. The Marriage Allowance allows the partner with the lower income to transfer up to £1,260 of their Personal Allowance to their husband, wife, or civil partner. By doing so, they can effectively reduce their partner's tax bill by up to £252 annually (April 6 to April 5 of the next year).

Furthermore, for eligible couples, there's an additional benefit to the Marriage Allowance. They have the option to backdate their claim for the previous four tax years. This means they can receive a lump-sum payment exceeding £1,000, providing them with a significant financial boost.

couple sitting with london view in the background

Eligibility Criteria for Marriage Allowance

To be eligible for the Marriage Allowance, there are certain criteria that both you and your partner must meet:

  • Marriage or Civil Partnership: You must be married or in a civil partnership recognized by the UK government.
  • Income Levels: The partner transferring their allowance (the 'donor') must have an annual income below the Personal Allowance threshold, which is £12,570 for the tax year 2022/23. The recipient must have an income between £12,571 and £50,270 for the same tax year.
  • Tax Rate: The recipient partner should be a basic rate taxpayer. This means they are liable to pay tax at the basic rate (20%) rather than the higher rate or additional rate.
  • Residency: Both you and your partner should be living in the UK. If either of you lives abroad, you won't be eligible for the Marriage Allowance.

In Scotland, your partner must pay the starter, basic, or intermediate rate of income tax, typically indicating an income range between £12,571 and £43,662.

It's worth mentioning that your application for the Marriage Allowance won't be affected if you or your partner are currently receiving a pension or living abroad, provided you are still eligible for a Personal Allowance. But if either you or your partner were born before 6 April 1935, you might want to apply for the Married Couple’s Allowance instead. However, you cannot claim both Marriage Allowance and Married Couple’s Allowance simultaneously.

pounds money from the UK

How to Apply

Before applying, it's essential to confirm that you meet the eligibility criteria mentioned earlier. Use the eligibility checker on the HMRC’s Marriage Allowance calculator to do this.

If you meet the requirements, you can apply online through the government's official website. You'll need some essential information, such as your National Insurance number and proof of identity.

Once approved, the partner transferring their allowance will receive a reduced tax bill for the current tax year. In addition to the annual reduction of £252, there's also the potential for a lump sum payment of more than £1,000.

Other Tax Benefits of Marriage in the UK

In addition to the Marriage Allowance, there are several other tax benefits to consider when you tie the knot in the UK. Here's a quick overview of some of these benefits:

  • Inheritance Tax (IHT): When one partner passes away, assets and property left to the surviving spouse are typically exempt from Inheritance Tax. This can provide significant financial relief to the surviving spouse and their family. 
  • Capital Gains Tax (CGT) Advice: Married couples can efficiently manage their Capital Gains Tax allowances by transferring assets between spouses without incurring Capital Gains Tax. This can lead to tax savings when managing investments and assets. 
  • Married Couple's Allowance: Couples where at least one partner was born before April 6, 1935, may be eligible for the Married Couple's Allowance, providing additional tax relief for the older partner.
  • Reduced Income Tax: When one spouse or partner pays tax at a lower rate than the other, it becomes advantageous to consider redistributing assets to be owned by the lower-earning spouse. This strategy can help optimize available allowances and potentially lead to lower tax rates.
  • Pensions: For married couples and civil partners who hold final salary pension schemes, the surviving spouse typically receives survivor benefits based on the final salary pension built up by their partner. However, these benefits may not apply to couples living together. The rules for survivor benefits vary between pension schemes, with some limiting payments to financially dependent individuals or allowing partner nomination.

These tax benefits can vary based on individual circumstances, such as income, assets, and residency status. Therefore, it's advisable that married couples should seek professional advice from a tax expert or financial advisor to maximize these opportunities and ensure compliance with tax regulations.

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