New married couples tax break – how you could benefit
Published 5 March 2015
The new Marriage Allowance tax break will be available from 6th April 2015, and could save married couples up to £212 a year.
Registration has now opened for a government scheme to offer married couples a tax break if they earn under a certain threshold, meaning a saving of up to £212 a year, if you’re eligible.
The new Marriage Allowance will be available for married couples, or those in a civil partnership, and it will allow one partner to transfer some of their Personal Allowance over to the other one, if they’re not using it. Your Personal Allowance is the amount you can earn in a year before you have to pay income tax on it. Marriage Allowance will be available from 6th April but you can sign up online now to be notified when it goes live.
Who’s it for?
Marriage Allowance won’t be available for all couples. To qualify, you have to have an annual income of less than £10,600, in the tax year from 2015 to 2016. Including any pensions, savings, or investments, your total income for the year must be below the threshold. Your husband, wife, or civil partner must have a yearly income of between £10,601 and £42,385, meaning they’re not a higher rate tax payer, and you both must be born on or after 6th April 1935. The government claims that more than 4 million married couples and 15,000 civil partnerships will qualify for the Marriage Allowance tax break.
If you’re eligible, the lower earner of the two of you will be able to transfer up to £1,060 of their Personal Allowance to the other partner – meaning that they will be able to have a tax-free allowance of up to £11,660. So, in the first year couples will be able to save up to £212 in income tax. For those on a lower income, this could be a really great way to save a bit of extra cash every year.
If you’re an older earner and looking to save, don’t worry if you don’t qualify for the Marriage Allowance. You may instead be eligible for the Married Couples Allowance, which can cut your tax bill by £314 a year.
How can I apply?
As we’ve already mentioned, the Marriage Allowance Tax Break doesn’t actually start until 6th April this year, the start of the next financial year. However, you can sign up now on the government’s website to register your interest. They’ll send you an email when the scheme goes live so that you can complete your application. After that, you don’t have to do anything. HMRC will get in touch with your employer to let them know that your tax code has changed and the higher earner will receive the extra money in their pay cheque every month.