HMRC Marriage Allowance

Are you claiming your Marriage Allowance from HMRC?  This little tax perk was introduced on 6 April 2015 and it is estimated that 3.7m couples aren’t taking advantage of it.

What is Marriage Allowance?

For tax year ending 5 April 2017, those of you in who are married or in a civil partnership, where one person is earning below £11,000 and the other is earning between £11,001 and £43,000, as a couple you may be entitled to transfer up to £1,100 (10%) of personal allowance from one person to the other.

So let’s assume that Jack and Jill were married for several years now.  Jill decided to become a sole trader but is in the early stages so only earned £9,900 in the tax year.  Jack, however, has been in steady employment and earns £40,000 so pays basic rate tax at 20%.

Jills earnings of £9,900 are tax free since the current personal allowance is £11,000.  However she still has personal allowance of £1,100 remaining.

Under marriage allowance she is allowed to transfer her unused allowance of £1,100 to Jack.  Jacks personal allowance now increases from £11,000 to £12,100 – meaning a further £1,100 of his earnings are tax free.  He has just saved £220 (£1,100 x 20%).

Who is Eligible for Marriage Allowance

The rules to be able to claim the Marriage Allowance are –

  • you’re married or in a civil partnership
  • you don’t earn anything or your income is under £11,000
  • your partner’s income is between £11,001 and £43,000

I think I am Eligible for Marriage Allowance – What do I do now?

If, like Jack, you are employed head over to HMRC and register online  There will probably be a change to your tax code and it can take a couple of months to take effect, so don’t delay in getting the process underway.

If you are self employed and pay tax through the self assessment system, you can claim your entitlement to the Marriage Allowance on your tax return.  Just let your accountant know and they can take care of all the paperwork.

I think i missed out last year!

The great news is you can make a backdated claim for your marriage allowance for the previous tax year 2015/2016 if you missed out.

The maximum Marriage Allowance available for 2015/2016 is £212, so for those who are self employed and due to file a tax return on 31 January 2017 this will be the maximum amount.

But if you are employed you could benefit for the extra £212 on top of the current year allowance of £220, so don’t miss out and get yourself registered.

**all workings based on marriage allowance available for the tax year 2016/2017**

Anita is a Chartered Accountant, turned blogger, with over 10 years experience in accounting, tax and operations for Small Businesses. Anita is on a mission to make finance simple for the self employed, so they can stop stressing about their business finances and focus on building profitable businesses which will give them the lifestyle they dream of.