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Tax Relief for Married Couples

Written by, Marija Petkova

Updated September, 7, 2022

If you’re married or in a civil partnership, you may be eligible for some allowances that can reduce the amount of taxable income you pay.

But, what is tax relief for married couples and how can you make the most of it?

Let’s find out.

What Is the Marriage Tax Allowance UK?

Marriage Allowance, is a tax benefit that helps married couples and people in civil partnerships reduce their collective tax bill. This type of allowance can save couples up to £252 for the 2022/2023 tax year. 

For the previous tax year, the maximum amount was £9,075. The amount is usually adjusted to inflation.

How does Marriage Tax Allowance work?

Applying for a Married Allowance essentially allows transferring tax allowance to a spouse or a partner. Partners can transfer only £1,260 of their Personal Allowance.

The lower earner usually has to have an income that’s below £12,570 so the couple can benefit from the scheme.

To apply for a Married Allowance, the lower earner must submit a request to HMRC to have some of their Personal Allowance transferred to their spouse. If your salary is below £11,310 (the Personal Allowance minus £1,260), you won’t have to pay any taxes.

The higher earner will end up paying more taxes, but they’ll pay less as a couple. 

If the marriage ends (through divorce or death), the allowance will transfer to the spouse automatically and last until the end of the tax year.

Who Can Qualify for Marriage Tax Allowance?

Marriage Allowance is a marriage tax refund that’s available to couples who are married or in a civil partnership. 

You might be eligible for Marriage Tax Allowance,

  • If you are married or in a civil partnership.
  • If your partner earns between £12,000 and £50,270 a year before they receive Marriage Tax Allowance (and pays income tax at a basic rate).
  • If your income is below £12,570 and you do not pay income tax, or if your income is below your Personal Allowance (usually £12,570).

4 Ways That Marriage Can Reduce Your Tax Bill

There are several marriage tax benefits in the UK. Marriage offers monetary benefits in the form of income tax savings, capital gains tax reductions, and inheritance tax avoidance. 

  •  Getting married can cut your capital gains tax bill

Married couples may exchange property without incurring any taxes, though there are some exceptions. You’ll have to pay taxes if you’ve been separated for that tax year and if you’ve given your partner goods to sell for a business. 

  • Marriage can reduce your inheritance gains tax

The default inheritance tax rate is 40% when the value of the estate exceeds the £325,000 threshold. However, spouses are not subject to inheritance tax. 

  • Marriage can reduce income tax

To reduce income tax, you can apply for Marriage Tax Allowance and transfer £1,260 of your Personal Allowance to your husband, wife, or civil partner. This may save you upwards of £900 in taxes each year.

  • Marriage ensures pension continues after the partner’s death

You may be eligible to receive a portion or all of your partner’s pension when they die, regardless of whether they have State Pension benefits or a private pension.

How Marriage Tax Allowance Is Calculated

Under the Marriage Allowance scheme, the lower earner can transfer £1,260 or around 10% of their Personal Allowance to their spouse or partner. 

If this throws them below the threshold of £12,570, they will not pay any taxes.  

For example, if one of the partners has a part-time job and earns £5,000 and their Personal Allowance is £12,570, they don’t play any taxes. But, because they are below the Personal Allowance threshold, they can transfer some to their partner. 

When they transfer £1,260 to their partner who earns £30,000, they increase their Personal Allowance to £13,830. Without the tax relief, this partner would have paid taxes of £17,430. After their partner transfers some of their Personal Allowance, they now pay taxes on £16,170, saving a total of £252.

Can Marriage Tax Allowance Be Backdated?

Yes, backdating Marriage Tax Allowance is possible. This means you can claim Marriage Tax Allowance for previous tax years where you have missed out on the benefit, provided that you meet the criteria for that period. 

You can only reclaim up to four years of taxes. 

Bottom Line

The UK offers a lot of tax breaks for married couples and people in civil partnerships, one of which is marriage tax allowance. Couples that meet the criteria can cut their tax bill and save up to  £912.50 for the 2022/2023 tax year.

Frequently Asked Questions And Their Answers

Can I claim Marriage Tax Allowance if I’m unemployed?

Yes, you can claim a marriage tax allowance if you’re unemployed as long as your partner is a basic-rate taxpayer. You can benefit from Marriage Tax Allowance if one partner makes £12,500 or less and the other makes between £12,501 and £50,000.

Can I cancel my Marriage Tax Allowance?

Yes, and you will need to contact the HMRC. Once you apply for Marriage Tax Allowance, you’ll automatically apply for it every year, until you cancel it.

What is the difference between the Marriage Tax Allowance and Married Couple’s Allowance?

There are a few minor differences between the two, the main one being that Married Couple’s allowance can only be claimed by couples where one of the partners was born before 6 April 1935.

Unlike tax relief for married couples provided via the Marriage Tax Allowance scheme, couples that qualify for Married Couple’s Allowance can save between £353 and £912.50 a year.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.