NFU Mutual has issued a warning that 3.5 million unmarried couples living together could be missing out on a valuable HMRC perk worth £252 a year. The financial services company is urging couples to ensure they are claiming Marriage Allowance from the Labour Party government.
What is Marriage Allowance?
Sean McCann, Chartered Financial Planner at NFU Mutual, explained: "The marriage allowance allows non-taxpayers to transfer up to £1,260 of their unused personal allowance to their basic rate tax-paying spouse or civil partner. It's worth up to £252 this tax year and claims can be backdated but is not available to cohabiting couples."
Mr McCann warned that many cohabiting couples mistakenly believe they hold the same legal rights as married couples, only for difficulties to arise upon the death of a partner. Under intestacy rules, an unmarried partner has no automatic entitlement to inherit should their partner die without a will, regardless of the length of their relationship or whether they have children together.
"The surviving partner would need to make a claim on their late partner's estate, which can be a time-consuming and expensive process, with no guarantee of success," he said.
Example from Martin Lewis' Team
BBC and ITV star Martin Lewis' team at Money Saving Expert provides an example: "Peter earns £5,000 a year working part time at the local supermarket. As his personal allowance for the year is £12,570, he has plenty of it left to transfer to his wife, Fiona. Fiona is a software developer who earns £35,000 a year, meaning she's a basic-rate taxpayer (higher-rate tax starts at £50,270 for most). Her personal allowance will effectively increase by £1,260 to £13,830 after Peter transfers his allowance."
"This means Fiona can earn an extra £1,260 free of tax (beforehand she would have paid tax on it at 20%). As a result she's £252 better off (equivalent to 20% of £1,260)."
Reader Success Stories
One respondent to MSE said: "Thanks for your info, we got a cheque for £923.52 within a week of applying." Another added: "I made a claim for this year and previous years. I was amazed to get a rebate of £1,100. My wife is terminally ill and this money will enable us to tick off another part of her bucket list. I cannot tell you how grateful we are."
