Marriage allowance – are you eligible?

It works where one party to the marriage does not utilise all of their personal tax free allowance and the other party does not pay tax at more than the basic rate of income tax. In addition, both spouses must have been born after 5 April 1935.

For example, Wilma works 35 hours a week in an office, earning £25,000 a year. Fred works part time whilst Pebbles is at nursery, earning £7,500 a year.

Fred does not utilise all of his personal allowance for 2015/16 (£10,600) and therefore elects to transfer the maximum amount of his tax free allowance to Wilma of £1,060 (for 2015/16).

Wilma’s personal allowance is then increased by £1,060 to £11,660 (£10,600 + £1,060) which saves her £212 of income tax (£1,060 x 20%).

If Fred had earned £10,000, then he could only transfer the balance of his personal allowance (i.e. £600) to Wilma.

Whilst the allowance will be applicable in the above scenario, it could also be available in the following circumstances:

  • Where one spouse works and the other does not – be that due to unemployment, disability or raising children.
  • Where one spouse takes some time off after the birth of a child – maternity or paternity leave and their earnings drop below the higher rate threshold.

If you wish to apply for the allowance with HM Revenue & Customs, you can register your details below.

It is important to remember that the income to consider when calculating if you utilise your personal allowance includes not only earned income but investment income (interest, dividends, rental profits), pensions and some Government benefits.

You do not qualify if you are not married so co-habiting couples miss out on the allowance.

If you would like further information, then please contact us.