Claiming marriage allowance can reduce your tax by £250 in 2019-20. This relief is available to married couple or couple that are in civil partnership. Many tax payers are not aware of this tax relief, but how does it work?
Personal Allowance 2019-20
UK tax payers have a personal allowance of £12,500. This effectively means, no income tax is paid on the first £12,500 and any income above that and up to £50,000 is taxed at 20%. The personal allowance and tax band will vary from year to year:
|Marriage allowance (10%)||£1,250||£1,185||£1,150||£1,000|
You work part time and have an annual income of around £8,000. As your income is less than the personal allowance threshold (£12,000), you do not pay any income tax. Your partner is in full time employment and earns £25,000 annually. The first £12,500 are not taxed, however the remaining 12,500 are taxed at basic rate 20%, i.e. £2,500. If you then claim marriage allowance, you can transfer £1,250 of your personal allowance to you partner. So your partner basically has a personal allowance of £13,750 (£12,500 plus £1,250) and now only £11,250 is taxed at basic rate, i.e. £2,250, a difference of £250!
Who can apply?
You can benefit from Marriage Allowance if all the following apply:
- you’re married or in a civil partnership
- you do not pay Income Tax or your income is below your Personal Allowance (usually £12,500)
- your partner pays Income Tax at the basic rate (20%) which usually means their income is between £12,501 and £50,000 before they receive Marriage Allowance
You cannot claim Marriage Allowance if you’re living together but you’re not married or in a civil partnership.
How to claim?
It’s quite simple, if you normally submit paper Self-Assessment Tax Return, you need to fill out the marriage allowance section as shown below, or contact us and we can help you claim marriage allowance and save £250!